The economic outlook of executives towards the world economy that had been in severe distress due to the COVID-19 pandemic is now changing. The initial impact of gloom and despair, which had shocked the global countries during the beginning of 2020, is now gradually turning to a more positive outlook, as evident from the survey conducted by Mckinsey and Company during October.
Despite the rise in COVID-19 cases across the nations in Europe and America, the executives’ positive attitude are on a larger scale that applies not only to their own companies but also to the national economies and the global economy, observes Hani Zeini. The economic sentiment is changing for sure that has been steady since September, and the positivity is more around the company prospects and the economy. However, there has been some tempering of attitude regarding the optimism about the global economy.
Hani Zeini explains the response in numbers
There has been a decline in the number of respondents to the survey that see improvement in the global economic condition, as only 51% feel so. However, the percentage of respondents who believe that the situation will remain the same has gone up compared to the figure in September. Interestingly, the number of respondents that stick to the belief that the conditions will worsen as they have been thinking since the pandemic’s outbreak remains unchanged. Almost 57% of respondents expect the global rate to increase in the coming 6 months, and the figure is the same as that in September.
Outlook about national economies
The survey reveals that the executives’ outlook about national economies remains where it was in September without any change. 55% of respondents are hopeful of improvement during the coming 6 months. The shift in outlook encompasses all regions except for Greater China that has maintained positive sentiments for a long and proved to be die-hard optimists. The outlook across Europe has also undergone moderation. The respondents are pessimistic about the future and expect a decline in the economy in the days to come.
Changing views about the effect on GDP
Besides the outlook about the economies, the survey also captures the changing views about the effects of the Covid19 crisis on GDP. In reply to a query about choosing one of the nine most likely scenarios they expect for their country, the respondents chose the one characterized by partially effective public health and policy responses. This is a shift from their earlier response in September that focused on sector damage, virus containment, and a lower growth rate in the long term. At the global level, too, the respondents favored partially policy responses, which have been their stand since April.
However, the change in outlook for the world economy is evident as the respondents have moved away from their earlier stand of slow long-term growth due to virus recurrence and have now adopted the view that revolves around lower growth in the long term due to sector damage and virus containment.