Despite Global Tensions, Execs Expect Growth

Tensions in the Middle East, Eastern Europe and Africa have done little to dampen executives enthusiasm for the global economy, according to results of a McKinsey survey. Most executives believe that global GDP will grow at the same rate this year as it did in 2014, according to McKinsey, although there is less optimism in China, the world's No. 2 economy.


Chinese executives, according to McKinsey, are notably downbeat about their home economy. The largest shares believe that economic conditions have declined over the past six months—and that conditions will worsen still in the coming months. Elsewhere, respondents in Europe indicate that geopolitical instability is top of mind as a risk to both domestic and global growth, while executives outside Europe report emerging worries over potential debt defaults and the exit of countries from the eurozone.


In China, executives are notably downbeat on current and future conditions at home—behind only their peers in Latin America, who have reported the most negative views on their own economies since December 2013. Respondents there are twice as likely as the global average to say domestic economic conditions have worsened in the past six months, and nearly twice as likely to expect conditions will be worse six months from now. Yet, the mood is definitely brighter outside China. In developed Asia, respondents’ views have rebounded since December. Fifty-five percent now say conditions are better than six months ago, up from 14% in the previous survey—and compared with 12% who say so in China. Executives in India remain overwhelmingly positive on domestic conditions, as they have been since last June.


In Europe and around the world, when asked about threats to growth in the world economy, executives agree—for the fifth survey in a row—that geopolitical instability poses an outsize risk. The risk is more acute in Europe, where respondents cite instability more often than others as both a global and domestic threat. And in non-eurozone Europe geopolitical issues are especially top of mind.


Interestingly, among regions, respondents in North America still report the gloomiest views on both current and the previous survey future global conditions, while those in India remain the most bullish.