American executives’ confidence about growth in next three years cuts a stark contrast with global outlook, KPMG survey shows
- A poll showed 87 per cent of US executives were either “confident” or “very confident” about prospects of economic growth over the next three years
- Optimism among Chinese executives almost halved to 48 per cent, from 76 per cent during the same period
American executives are the most optimistic about the prospects of economic growth over the next three years, drawing a stark contrast with corporate chieftains in 10 other countries, according to a KPMG survey.
A poll of 1,300 chief executives in 11 of the world’s largest economies showed that 87 per cent of US executives were either “confident” or “very confident” about the prospects of economic growth in the next three years, an improvement from 52 per cent last year.
The rising confidence of American executives was a stark contrast to the remainder of the respondents from the 10 next-biggest economies. Optimism among Chinese executives fell by a third to 48 per cent, from 76 per cent during the same period. Confidence was also low among UK executives at 43 per cent and those from France at 44 per cent, with Australians being the most pessimistic at 38 per cent, according to KPMG’s 2019 China CEO Outlook survey, the fifth in its series.
“American CEOs are more positive as the economy has been robust in the past two years” with low unemployment rate, while the stock market “had been doing well,” KPMG China chairman Benny Liu said in an interview with South China Morning Post. “Many of the US companies are also doing well and they therefore have more confidence in the global economic growth outlook.”
The US economy has shown clear signs of picking up the pace since its slowdown in the first three months of the year, with forecasts ranging from Bloomberg’s median forecast of 3.4 per cent to the Federal Reserve Bank of Atlanta’s 4.5 per cent pace.
The Dow Jones Industrial Average is trading near its historic high, having risen 7 per cent since Trump kicked off his trade row with China in 2018, while China’s benchmark CSI 300 Index dropped 5.9 per cent in the same period.
“The decline in confidence level comes with the escalation in the trade war between the US and China,” said Hantec Pacific’s managing director Gordon Tsui Luen-on. “Brexit and the weakness in European Union economies also dragged down economic growth globally since the middle of last year.”
Still, China’s corporate executives plan to expand globally over the next three years, with all respondents affirming their plans, compared with 94 per cent in 2018, according to the KPMG survey of companies with annual revenues between US$500 million and more than US$10 billion. The other countries in the survey are Germany, India, Italy, Japan, The Netherlands, Japan and Singapore.
German executives’ confidence dropped to 50 per cent, from 70 per cent. India’s optimism fell to 53 per cent from 89 per cent, while Japan’s confidence dropped to 62 per cent from 85 per cent, the survey showed. Some European executives were optimistic, with the collective confidence of Spain rising to 64 per cent from 56 per cent, 62 per cent of Dutch executives expressing optimism from 58 per cent, while Italy’s confidence rose to 60 per cent from 58 per cent.
More Chinese executives are looking to buy assets, with 85 per cent of respondents saying they are favourable toward mergers and acquisitions in the next three years, compared with 76 per cent last year.
“Many companies have conducted M&A to upgrade their technology or to enter into new markets and to diversify,” Liu said. “Some manufacturing companies have moved to countries where they have lower operational costs. This has been happening for a while, even before the trade war started last year.”
