COVID-19: Global Economic Sentiment Shifting Toward Optimism

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Executives almost worldwide are more optimistic about the economy and their own companies’ performance than they have been at any time so far during the coronavirus pandemic, according to a new survey by McKinsey & Company.

“More than half of all executives surveyed say economic conditions in their own countries will be better six months from now,” the global consulting firm wrote in a report published late September.

This is while 30 percent say the economic situation will deteriorate, which, as McKinsey says, is the smallest share of respondents all year to expect worsening conditions.  

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The findings show that respondents in every region, except for those in developing markets, are more likely to predict that conditions will improve rather than getting worse.  

“That is even true of those in North America, where, between June and July 2020, respondents’ outlooks had taken a negative turn.”

Also, the survey shows that the share of respondents expecting improvements in the global economy has increased in recent months.

“Now 57 percent say so, compared with 52 percent in June and 25 percent in March. Across regions, emerging-economy respondents report more positive views on the global economy than their peers do: 73 percent expect global conditions to improve in the next six months, compared with 49 percent in developed economies—a much greater gap than previous surveys this year.”

Likewise, executives’ hopes are increasingly high for their companies. For the first time in 2020, majorities of respondents predict that both demand and profits will increase in the coming months, the report says.

“Even so, respondents are equally likely to expect their workforces will shrink as they are to predict growth. Most predict that the unemployment rates in their countries will continue to increase, and they report that their companies are resuming operations more slowly than they expected back in June.”

Workforce size is found to be a bigger worry in developed economies than elsewhere.

According to McKinsey, respondents in developed economies are more likely than their emerging-economy counterparts to expect a decline in workforce size─33 percent, compared with 23 percent. In June and in March, they were nearly equally likely to expect a decrease.

The survey adds that, as seen three months ago, over half of all respondents expect the unemployment rates in their countries will increase.

“By geography, executives in Europe are most likely to say so; 79 percent in that region predict that unemployment will rise in the months ahead.”

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When asked about the most likely COVID-19-related scenario for the global economy, respondents picked a scenario that involves “partially effective policy and public-health responses and a years-long economic recovery.”

But for their own economies, respondents now most often select a scenario that is characterized by “containment, sector damage, and a lower growth rate over the long term”.

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