CHICAGO: Company executives around the world are optimistic about the outlook for the global economy and their own countries in 2022, despite concerns about risks from new Covid-19 variants and rising inflation, a survey by McKinsey & Company shows.
More than half of respondents (57 percent) expect both the global economy and their countries’ economies to improve in the next six months, though this proportion declined since the summer, said the latest McKinsey Global Survey released in December.
“Respondents in India, greater China and Asia-Pacific are the most optimistic: more than three-quarters in each of those locations predict improvements in their countries,” the report said. Only 26 percent of company executives in Latin America were upbeat about economic improvements in their nations.
Echoing a similar sentiment to the executives’ bullish outlook, the US investment bank JP Morgan said 2022 will be the year when the world registers a full global economic recovery. The Covid-19 pandemic will end next year, ushering in a return to the economic and market conditions the world had before the outbreak, the bank said in its 2022 Year Ahead Outlook report.
Global corporate executives were also largely positive about the outlook for economic conditions in their own countries, with 64 percent of respondents expecting customer demand to increase in the next six months, down from 74 percent in the June survey. Nearly two-thirds of respondents expect profits to rise, compared with 74 percent in June and September.
In December, executives cited the Covid-19 pandemic as the top risk to economic growth above all other factors, as they have done in every survey since early 2020, McKinsey said. Investors are fretting over the surging cases of the Omicron coronavirus variant that poses a further threat to the economic recovery later in the year.
In McKinsey’s October survey, before the Omicron variant emerged, supply chain challenges briefly replaced the pandemic as the top risk.
The latest survey in December also asked executives to choose the likeliest of nine scenarios for the pandemic’s economic and health impact, both globally and in respondents’ countries.
Compared with the October survey, a larger share selected global and domestic scenarios with recurrences of the Covid-19 virus rather than scenarios with effective control of the virus’s spread. The second biggest worry for global company executives in December was rising inflation. Respondents selected inflation as one of the top two most-cited risks to domestic growth, behind the pandemic.
“Inflation has also become the primary concern of those in North America and developing markets,” McKinsey said. “These concerns mark a striking change from one year ago, when geopolitical instability and high levels of national debt loomed as the second-most-cited threats to global and domestic growth, respectively, behind the pandemic.”