Economic conditions outlook, June 2021
07.13.2021
Executives’ overall views on the economy continue to improve. As more and more economies are recovering from the pandemic, perceptions of potential risks are evolving.

Positive momentum continues to build in many respondents’ home countries and in the world economy, according to our latest McKinsey Global Survey on economic conditions. Yet by geography, the results reveal starkly different sentiments between developed economies (where more countries are experiencing or anticipating a recovery) and emerging economies (where several regions face ongoing public-health challenges). Executives in developed economies now report much more positive views than their counterparts—a reversal from the first year of the pandemic—as well as new threats to growth. As the pandemic recedes as an outsize and largely universal risk to the economy, respondents believe that inflation and supply-chain disruptions are emergent.

Still, executives in all geographies continue to report an increasingly positive outlook on the economy and believe that their companies’ prospects have never been brighter.

Risk to growth.png

The COVID-19 pandemic still tops the list of risks to economic growth in respondents’ countries, but the share of executives saying so has declined significantly. Compared with April, respondents in developed economies also consider the pandemic a much less acute concern. Twenty-eight percent of them cite the pandemic as a risk to domestic growth, compared with half of their emerging-economy peers. In the previous survey, 65 percent in developed economies identified the pandemic as a risk to their countries’ growth.

By region, executives’ views on the biggest risks to growth at home have also shifted. In North America, respondents most often cite inflation as a risk to growth (45 percent say so), followed by supply-chain disruptions, domestic political conflicts, and rising taxes. And in Latin America, respondents cite domestic political conflicts more than the pandemic (43 percent, versus 32 percent).

While unemployment concerns are ebbing on average—even in Europe, where since September 2020 respondents have been much more likely than others to expect rising unemployment—the picture is more mixed in a few geographies. Respondents in Asia–Pacific, India, and Latin America are nearly evenly split between those who expect the unemployment rates in their countries to increase and to decrease.

Economic conditions.png
Executives also believe that interest rates are poised to rise. Just over half of all respondents believe that their countries’ interest rates will increase in the next six months, up from 38 percent in the previous quarter. But respondents’ views vary significantly by region. In North America, 70 percent expect rising interest rates, followed by their peers in Latin America (64 percent), while in India, only 22 percent say the same.

On average, and everywhere but India and developing markets (including the Middle East, North Africa, South Asia, and sub-Saharan Africa), executives’ sentiment about their home economies continues to brighten. Seventy-three percent of all respondents say that conditions in their own economies are better now than they were six months ago, up from 53 percent in the previous quarter, which marked the first time in three years that a majority of respondents reported improving conditions at home.

Finally, respondents say that their own companies’ prospects continue to improve. An increasing share expect that their workforce sizes will grow in the next few months, while 74 percent expect that company profits and demand for their companies’ offerings will increase in the next six months. On the demand front, this is the largest share to predict an increase since we began asking the question in April 2009.

Topics
Release date
06.29.2021
Source
www.mckinsey.com

McKinsey & Company is an American worldwide management consulting firm, founded in 1926 by University of Chicago professor James O. McKinsey, that advises on strategic management to corporations, governments, and other organizations.

News on topic
Analytics on topic
Report
06.12.2020
Report
06.12.2020
French economic outlook
The current situation in France’s rail freight market and the forecast of the main macroeconomic indicators point to the revival of economic activity.
Report
12.28.2020
Report
12.28.2020
Redrawing the Map of Global Trade

The paths of the COVID-19 pandemic and the recovery of the global economy remain impossible to predict. But it is becoming increasingly clear that, disruptive impact on international trade will leave a lasting mark. Companies should take a fresh, holistic view of the markets and trade relationships that are likely to drive growth and secure competitive advantage in the post-COVID-19 world.