Here is an excerpt from an article featured online by McKinsey & Company. The results of a recently conducted survey indicate that executives’ optimism for the global economy is increasing, as they anticipate future growth from developed markets. Geopolitical instability tops the list of risks to global growth. Geopolitical instability tops the list of risks to global growth.
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Global executives are increasingly positive about the direction of the world economy, though in our latest survey on economic conditions, the source of their optimism has shifted away from emerging markets and toward the developed world. For the first time since we posed the question 18 months ago, respondents say they no longer expect developing markets to lead global economic growth over the next decade. Instead, they expect developed markets — and an improving Europe in particular — to advance future growth.
The shift in sentiment is evident at the national level as well. Respondents working in developed economies2 are increasingly optimistic about their local conditions. Six months ago, 39 percent of these executives said economic conditions in their countries would improve. Today, 49 percent say conditions have actually improved during that period. By contrast, just 26 percent of respondents in emerging economies3 say current conditions are better now, though six months ago half of them said conditions would improve.
Higher hopes for global growth
Executives may have cooled their expectations that emerging markets will lead global economic growth over the next ten years. But they are increasingly positive about global economic prospects as their expectations for growth move toward the developed world.
The 49 percent who say conditions in the global economy are better now than six months ago represent the largest share to say so since we first asked 18 months ago. Some 48 percent expect improvement over the next six months, a gain of 7 percentage points since June. Among their peers, respondents in the eurozone are the most bullish: 59 percent say current global conditions have improved, compared with 34 percent in June, and 63 percent predict conditions will be better in six months’ time, up from 49 percent three months ago. [Please see Exhibit 1.]
Accordingly, expectations for Europe are high. One-half of all respondents expect to see positive growth in the eurozone in the last quarter of 2013, and one-third say the same for the year as a whole. Executives in the region are even more optimistic: 68 percent predict fourth-quarter growth, 41 percent expect year-end growth, and 52 percent say conditions at home will improve, 20 percentage points higher than in June.
Respondents also expect continued economic improvement in the United States. Those predicting stronger US growth in the second half of the year than in the first half outnumber those expecting a weaker second half by more than three to one. Still, policy concerns weigh on executives: 59 percent say if the United States’ Federal Reserve begins tapering its bond purchases before the end of this year, global growth in 2014 will suffer.
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