• by Jack Loechner , Staff Writer @mp_research, April 18, 2004

Executives Bullish on Global Economy But Concerned About Consumer Spending

According to the McKinsey Global Survey of Business Executives, executives around the world voice cautious optimism on the economy. They're bullish on outsourcing and Asia but concerned about talent and capital. These are among the findings of a McKinsey Quarterly survey of some 7,300 senior executives from large and small companies. The survey, conducted in January, polled leaders from a wide range of industries and regions to develop a worldwide barometer of executive sentiment on economic and business trends.

Chief executives and other senior corporate leaders around the world agree that the global economy has improved in the past six months, but fewer are confident that the improvement will continue into the second half of the year. They also agree that outsourcing is good for the world economy, but somewhat less so for individual companies. And they view Asia as the region with the most promising growth prospects for 2004.

An overwhelming number of executives in the survey, from companies of all sizes and in all regions, believe that the global economy is healthier than it was six months ago, though many expect the improvement to level off during the first half of 2004. A confidence index derived from the survey registered a level of 67; on the scale where 50 or more indicates optimism. Executives in developing markets, with a confidence index of 71, are more bullish than the overall survey average.

Executives in China and India are more optimistic than their peers in the rest of the world, with 87 percent and 80 percent, respectively, predicting the economic climate will get even better by July. Of the other executives surveyed, 73 percent shared that sentiment.

Executives don't see an easy road ahead. In most regions, the economy tops more executive agendas than any other single concern. The exception: emerging markets, where executives are focused on the search for talent.

Beyond the economy, the concerns of executives from big companies (annual revenues of $1 billion or more) and smaller ones (revenues less than $1 billion) diverge in significant ways. Executives of larger companies worry about the sustainability of consumer spending-considered the lifeline that kept the recent US economic downturn from becoming still worse-followed by the competition for talent. Many also listed currency fluctuations, pricing, and global competition as key concerns.

Among executives at smaller companies, hiring and retaining talent is the second most important concern. Access to capital, which executives at larger companies hardly notice, comes in third. Executives at larger companies worry that consumers will rein in their spending.

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