Company executives around the globe have positive expectations for 2022, with relatively upbeat outlooks for the global economy and their countries, despite concerns around the risks of the new Covid-19 variant and rising inflation, according to the latest McKinsey Global Survey.
A majority of respondents (57 percent) expect both the global economy and their countries’ economies to improve in the next six months, though this proportion has slightly declined since the summer. In the developing markets, which includes the Middle East, respondents reported their main concern was Covid-19 (44 percent) and inflation (52 percent), on par with the global average. The developing markets are more concerned with geopolitical instability and/or conflicts, with 29 percent saying it was a concern, compared to 19 percent in China, and 17 percent in India and Europe each.
Respondents in India, Greater China, and Asia-Pacific are the most optimistic, with more than three-quarters in each of those locations predicting improvements in their countries and just 26 percent in Latin America say the same, stated the report.
Similarly, executives’ expectations for their own companies were greatly positive even after trending downward since the summer, with 64 percent 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 increase, compared to 74 percent in June and September.
The Covid-19 pandemic remains the most cited risk to domestic growth, as it has been in every other survey since early 2020, according to McKinsey. With surging cases of the omicron variant posing a further threat to economic recovery, investors are becoming apprehensive.
The latest survey 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 than scenarios with effective control of the virus’s spread.
Global company executives in December also expressed concerns about inflation, in which respondents selected inflation as one of the top two most-cited risks to domestic growth, behind the pandemic.
Respondents in Latin America were most apt to call inflation a threat to growth, as in October. Inflation has also become the primary concern of those in North America and developing markets.
These concerns mark a striking change from one year ago, when geopolitical instability and high levels of national debt were selected as the second-most-cited threats to global and domestic growth, respectively, behind the pandemic.
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