September 2022
In September, respondents in most regions cite inflation as the main risk to growth in their home economies for the second quarter, according to the latest McKinsey Global Survey on economic conditions.1 In all locations but Europe and Greater China, inflation is the most-cited threat to respondents’ economies over the next 12 months (Exhibit 1). In Europe, volatile energy prices and inflation are the growth risks cited most often, with geopolitical instability or conflicts a more distant third. In Greater China,2 the COVID-19 pandemic remains the most reported risk, cited by nearly half of respondents for the second quarter in a row.
Similar to the June survey’s findings, about four in ten respondents expect their countries’ economies to improve over the next six months, with a similar share expecting conditions to worsen. However, expectations vary by region (Exhibit 2). Respondents in Asia–Pacific and Europe are less likely than in June to say their countries’ economies will improve, while respondents in other developing markets have become more hopeful.
Pessimism about the global economy remains consistent with the previous findings, with about half of respondents expecting global conditions to weaken in the next six months. For the third quarter this year, geopolitical instability and conflicts remain the most-cited risk to global economic growth, and inflation remains the second-most-cited threat. In a change from June, volatile energy prices have superseded supply chain disruptions as the third-most-cited risk.
About the authors
The survey content and analysis were developed by Jeffrey Condon, a senior knowledge expert in McKinsey’s Atlanta office; Krzysztof Kwiatkowski and Vivien Singer, both capabilities and insights experts at the Waltham Client Capabilities Hub; and Sven Smit, the chair and director of the McKinsey Global Institute and a senior partner in the Amsterdam office.
This update was edited by Heather Hanselman, an editor in the Atlanta office.
June 2022
A new survey finds that inflation now tops the list of perceived economic hazards in respondents’ home countries and geopolitical conflicts remain a top threat to the global economy.
Just one quarter after geopolitical conflicts and instability overtook the COVID-19 pandemic as the leading risk to economic growth, survey respondents’ concerns over inflation now exceed their worries about the effects of geopolitical issues on their countries’ economies. In the latest McKinsey Global Survey on economic conditions, respondents most often cite inflation as a risk over the next year.3 They are now nearly half as likely as they were in the previous survey to cite geopolitical issues as a risk to their countries’ economies. However, geopolitical conflicts and instability remain an outsize concern in Europe, where 50 percent list it among their top risks. But even in Europe, inflation is the risk cited most often—as it is in every geography except Greater China.4 There, respondents most often point to the COVID-19 pandemic.
Geopolitical instability remains the top-cited threat to the global economy, as it was in the March 2022 survey, and inflation has overtaken volatile energy prices to become the second-most-cited concern. Supply chain disruptions round out the top three global risks, followed by volatile energy prices and rising interest rates.
Overall, pessimism about the second half of 2022 is on par with the early months of the pandemic in 2020, when more than half of respondents predicted that global economic conditions would worsen in the months ahead. In the latest survey, half of all respondents expect global conditions to worsen over the next six months, and 29 percent expect improvement. Respondents’ expectations for their home countries are somewhat more hopeful than their outlook on the global economy: 39 percent expect their economies to improve in the near future. However, this is the first survey since the one in September 2020 in which less than half of respondents expect improvements in their home economies. Now, they are just as likely to expect economic conditions will decline as improve.
Most respondents in Asia–Pacific and Greater China expect their economies to improve in the second half of 2022, although overall optimism has declined since the previous survey. Over the same time period, respondents in Europe and North America have become much more pessimistic about the future.
For more detail on the survey’s results, please see the exhibits below.
This update was edited by Heather Hanselman, an editor in the Atlanta office.
March 2022
Worries about geopolitical conflicts, among other risks to growth, now exceed executives' concerns about the COVID-19 pandemic. Overall economic optimism continues to decline.
Geopolitical instability is now cited as the top risk to growth in respondents’ countries, according to our latest McKinsey Global Survey on economic conditions.5 Our quarterly survey was launched four days after the invasion of Ukraine, and executives expect that its economic effects will be strongly felt.
More than half of all executives cite geopolitical conflicts as a risk to near-term growth in their own economies, up from 16 percent who said so in the previous survey. It’s the top risk to domestic growth in every geography except Greater China,6 where respondents most often cite the COVID-19 pandemic.7 Meanwhile, the share of respondents citing the COVID-19 pandemic as a top risk fell from 47 percent to 11 percent, as much larger percentages now identify inflation, energy prices, and supply chain disruptions as threats to growth at home.
At the same time, overall economic sentiment remains more positive than negative but continues to trend downward. For the third quarter in a row, respondents are less likely to believe that economic conditions, either global or domestic, will improve in the months ahead—and the global outlook is especially gloomy.
Forty-three percent of respondents believe the global economy will improve over the next six months, a share that’s nearly equal to the 40 percent who feel conditions will worsen. This month’s result also marks the first time since July 2020 that less than a majority of respondents feel optimistic about the global economy’s prospects.
For more detail on the survey’s results, please see the exhibits below.
This update was edited by Daniella Seiler, an executive editor in the New York office.
December 2021
Executive sentiment ends the year on a generally positive note, with most survey respondents expecting 2022 to bring better economic conditions despite heightened risks from the pandemic and inflation.
Respondents to the latest McKinsey Global Survey on the economy end a largely optimistic year with mostly positive expectations for 2022.8 These relatively upbeat outlooks, both for the global economy and for respondents’ countries, come despite a resurgence in concerns about the state of the COVID-19 pandemic: countries across Europe and North America had been reporting rising case numbers since early October, and WHO declared the Omicron variant to be one of concern just days before the survey launched.9 Respondents—particularly those in Latin America and North America—also see inflation as a pressing economic threat.
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 declined since the summer. The shares of respondents predicting economic improvements, both globally and domestically, are similar in size to those in the December 2020 survey who expected improvement. 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. Just 26 percent in Latin America say the same.
Respondents’ expectations for their own companies tell a similar story: they are still largely positive even after trending downward since the summer. Sixty-four percent expect 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 with 74 percent in June and September.
In a change from the October survey, respondents have once again cited the COVID-19 pandemic as a risk to domestic growth more than any other factor, as they have in every other survey since early 2020. In October, before the Omicron variant emerged, supply-chain challenges briefly replaced the pandemic as the top risk. 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.
Respondents also commonly express concerns about inflation. 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 loomed as the second-most-cited threats to global and domestic growth, respectively, behind the pandemic.
For more detail on the survey’s results, please see the exhibits below.
This update was edited by Heather Hanselman, an associate editor in the Atlanta office.
October 2021
Supply-chain disruptions now outweigh COVID-19 concerns as the biggest risks executives see to domestic and corporate growth.
In a change from the first three quarters in 2021, uncertainty over COVID-19 is no longer a foremost economic concern to executives, according to the latest McKinsey Global Survey.10 When asked about threats to growth in their countries’ economies, executives now cite mounting fallout on the supply chain—which is also the most common risk to company growth—and inflation more often than the pandemic itself. Having endured as the most-cited risk to domestic growth since March 2020, the pandemic is now cited by just one-quarter of respondents: half the share who did so in September 2021.
A larger share of respondents also now anticipate that the virus’s effect on public health will be reined in over the coming months. When asked about nine scenarios on the pandemic’s GDP effects in their countries, they are much more likely than in the previous survey to select a scenario in which the effective public-health responses contain the virus’s impact. This month’s most commonly chosen scenario, B1, assumes virus containment as well as ineffective economic intervention. In the previous two surveys, respondents most often ranked the A1 scenario, which envisions recurrences of the virus, as the likeliest one.
By the same token, many respondents expect their companies to emerge from the pandemic more resilient than before. Nearly three-quarters (74 percent) of respondents say their companies are more prepared for future crises now than they were before the pandemic. These reflections come as executives’ outlooks for their companies’ profits and customer demand continue to be largely positive. For the first time since July 2004, half of respondents expect their organizations’ workforces to grow over the next six months.
At the same time that hiring is expected to increase, respondents also anticipate talent shortages. After supply-chain disruptions, labor shortages are the second-most-cited risk to company growth over the next year, and they are the top concern among respondents in North America.11 These shortages also rank as a top-five risk to economic growth in respondents’ own countries.
And while overall expectations for the global economy and respondents’ countries remain rosy, respondents’ optimism has declined since the summer. Sixty-four percent of respondents expect global conditions to improve over the next six months, down from 71 percent in July and September.
For more detail on the survey’s results, please see the exhibits below.
This update was edited by Heather Hanselman, an associate editor in the Atlanta office.
September 2021
Executives’ sentiment on economic conditions continues to be positive, even as concerns mount—yet again—over the pandemic’s threat to growth.
Eighteen months into the COVID-19 pandemic, executives’ responses to our latest McKinsey Global Survey suggest that they believe the economy is on track toward a recovery.12 Throughout 2021, their views have, on average, been consistently positive. And they continue to report largely positive expectations: 71 percent of respondents predict that conditions in the global economy will improve in the next six months, down from an all-time high of 81 percent who said so last quarter.13 When asked about their countries’ economic prospects, most respondents still expect improvements, but that share has also decreased. Sixty-five percent of respondents now say so, down from a range of 73 to 79 percent who have said so since March 2021.
Yet with the Delta variant affecting so many parts of the world, worries over the pandemic’s effects on the economy have also reemerged—just one quarter after a historically low share of respondents cited it as a risk to domestic economic growth. In June, just 36 percent cited the pandemic as a risk to domestic growth over the next year; it was the smallest share to say so since we began asking, in March 2020. Now, 49 percent of respondents say the same, up from 42 percent in July.
The pandemic is followed by supply-chain disruptions and inflation, which were also among the top-three risks to domestic growth in the past two surveys. By region, the pandemic is the top risk in every region except Latin America. Respondents in developed economies also see it as a more prominent threat to growth than those in emerging economies. Fifty-two percent of developed-economy executives see the pandemic as a risk to growth in their own countries—nearly double the share who said so last quarter—compared with 45 percent in emerging economies.
The responses in developed economies suggest other concerns as well. For the first time since January, these executives are less likely than others to expect improving conditions in their home economies.
They are also less upbeat about their companies’ prospects. Respondents in developed economies are much less likely than their emerging-economy peers to expect an increase in the size of their companies’ workforces in the next six months, an increase in demand for their companies’ products and services, and an increase in company profits.
For more detail on the survey’s results, please see the exhibits below and our longer article, “Economic conditions outlook, September 2021.”
This update was edited by Daniella Seiler, a senior editor in the New York office.
July 2021
Executives’ views on the global economy have tempered, but expectations remain largely positive.
Optimism about the global economy has moderated but remains the predominant sentiment among executives, according to the latest McKinsey Global Survey on economic conditions.14 Seventy-one percent expect improvement in the next six months, down from 81 percent in June, breaking the streak of increasingly positive views that began at the start of 2021. Whereas in the previous survey respondents in developed and emerging economies were equally upbeat about global conditions,15 developed-economy respondents have become more measured. Sixty-five percent expect the global economy to improve in the next few months, compared with 83 percent of emerging-economy respondents.
Despite more cautious optimism about the world economy, expectations for respondents’ home countries remain just as upbeat as in June. Nearly eight in ten respondents (78 percent)—including a majority in each region—expect their countries’ economies to improve in the next six months, as was true in the June survey.
Respondents also express declining optimism at the global level when asked about nine scenarios for the pandemic’s effects on global GDP. As in June, they most often choose the A1 scenario—in which there are recurrences of the virus and slower near-term growth—although a significantly smaller share of respondents now see it as the most likely scenario. The B2 scenario, involving similar virus recurrence and less-effective economic policy, has become the second most cited, surpassing the virus-containment scenarios A3 and B1 that were more common selections in the June survey. Respondents in the latest survey are also more likely to cite a scenario in which there are high levels of adverse health impact (B3, B4, and B5).
When asked about scenarios for their countries’ economies, respondents are much more likely now than in June to pick scenarios that involve virus recurrence. A1 is the most commonly chosen scenario, overtaking virus-containment scenario A3. Only respondents in Greater China continue to select A3 most often.16 Overall, a larger share of respondents now see the likeliest scenario as B1—in which there is virus containment but an ineffective economic-policy response—rather than A3.
Yet respondents continue to report increasing optimism about their countries’ unemployment rates in the months ahead. The share expecting unemployment to rise (26 percent) is the lowest since before the pandemic, and respondents are now more than twice as likely to expect unemployment to decrease than increase. Even respondents in Latin America—the only region where in June, a forecast of increasing unemployment was more likely than a decrease—have become much more likely to expect unemployment rates to decrease. Conversely, respondents in developing markets17 and India have become less likely to say unemployment in their countries will go down. In India, unemployment has become one of the three most-cited risks to domestic growth in the coming months, along with the COVID-19 pandemic and inflation.
More broadly, respondents continue to see the pandemic, inflation, and supply-chain disruptions as the top three threats to their countries’ economic growth, respectively, as was true in June. But since the previous survey, the pandemic has become a larger concern for respondents in developed economies: whereas in June they most commonly said inflation was a top risk, they now cite the pandemic most often. For example, while inflation still outranks COVID-19 among respondents in North America, the share citing the pandemic as a threat has doubled (30 percent, up from 15 percent).
This update was edited by Heather Hanselman, an associate editor in the Atlanta office.
June 2021
Executives’ overall views on the economy continue to improve. As more and more economies are recovering from the pandemic, perceptions of potential risks are evolving.
Positive momentum continues to build in many respondents’ home countries and in the world economy, according to our latest McKinsey Global Survey on economic conditions.18 Yet by geography, some differences have emerged. Executives in developed economies report increasingly positive views compared with their emerging-economy counterparts—a reversal from the pandemic’s first year—as well as new threats to economic growth.
The COVID-19 pandemic still tops the list of risks to growth in respondents’ countries, but the share of executives saying so has declined significantly. Compared with April, respondents in developed economies also consider the pandemic a much less acute concern. Twenty-eight percent of them cite the pandemic as a risk to domestic growth, compared with half of their emerging-economy peers. In the previous survey, 65 percent of respondents in developed economies identified the pandemic as a risk to their countries’ growth.
Meanwhile, the shares of respondents citing inflation—the second-most-common risk, identified nearly twice as often as in April—and supply-chain disruptions have increased. Inflation has also risen in the ranks as a risk to growth in the global economy, though on average, responses show that the pandemic remains a much bigger threat to global growth than anything else. At the same time, respondents say supply-chain disruptions pose a greater risk to their companies’ growth than in prior surveys.
When asked about overall economic conditions in the months ahead, executives report an increasingly positive outlook. Seventy-nine percent expect conditions in their home countries to improve in the next six months, and a majority of respondents in each region expect improvements. Their global outlook is even more positive, with 81 percent predicting improvements in the months ahead.
Finally, respondents say that their own companies’ prospects continue to improve. An increasing share expects that their workforce sizes will grow in the next few months, while 74 percent expect that company profits and demand for their companies’ offerings will increase in the next six months. On the demand front, this is the largest share to predict an increase since we began asking the question in April 2009.
For more detail on the survey’s results, please see the exhibits below and our longer article, “Economic conditions outlook, June 2021.”
This update was edited by Daniella Seiler, a senior editor in the New York office.
April 2021
Though the pandemic overshadows other risks to growth, optimism about the economy persists and company prospects continue to brighten, especially on the hiring front.
In our latest McKinsey Global Survey on the economy,19 executives’ views are as decidedly positive as they were in March—even as the pandemic continues to dwarf other risks to growth. It’s an especially acute risk in India, where the week after the survey was in the field, the number of daily COVID-19 cases set a new world record.20
Globally, 73 percent of all respondents believe that conditions in the world economy will improve in the next six months. It’s the largest share to say so all year, while the share of executives expecting worsening conditions has shrunk by more than half in the past three months: 10 percent say so now, down from 23 percent in January.
The domestic outlook is equally upbeat and consistent across regions, even outside of Greater China21 or India—where, for eight surveys in a row, respondents were the most optimistic about their own economy’s prospects. Notably, respondents in India reported the biggest shift in sentiment since the previous survey. Though they are still more positive than not about their economy, the share expecting improved conditions in the next six months dropped from 86 percent in March to 64 percent currently.
As we saw in March, the COVID-19 pandemic continues to overshadow all other risks to domestic growth and now tops the list in every geography.22 The pandemic is cited as a risk by 48 percent of all respondents, while the second most common risk—unemployment—is cited by only 17 percent. It’s an especially acute concern in India, where 77 percent now cite the pandemic as a risk to domestic growth; in the previous survey, only 28 percent said the same, and unemployment was the most common risk then.
When asked about all potential risks to growth that executives foresee, there are some regional differences of note. Respondents in developed economies are more likely than their peers to cite the pandemic (65 percent, versus 55 percent), as well as asset bubbles, high levels of national debt, and supply-chain disruptions. At the same time, concerns over insufficient government support, unemployment, inflation, and weak demand are more top of mind in emerging economies.
On the company front, expectations for consumer demand continue to improve, and those for profits remain buoyant. Workforce expectations are on the rise as well, with 43 percent of respondents saying their companies’ head count will increase in the next six months. It’s the first time since the pandemic began that a plurality of respondents have said so, in a mostly steady rise since our June 2020 survey.
For more detail on the survey’s results, please see the exhibits below and our longer article, “Economic conditions outlook, April 2021.”
This update was edited by Daniella Seiler, a senior editor in the New York office.
March 2021
In a new global survey, executives see positive momentum building in the economy. But the pandemic still persists as an outsize risk to growth.
One year after the World Health Organization declared COVID-19 a global pandemic,23 the results of our newest McKinsey Global Survey signal greater optimism about the economy and corporate prospects than respondents have expressed since the crisis began—and on a few fronts, than they have in several years.24 Still, weak demand continues to threaten corporate growth, and the pandemic remains the biggest risk to growth in respondents’ countries.
While the global economic outlook has wavered in recent months, respondents are more optimistic now about the world economy’s prospects than they’ve been at any other point during the crisis. Sixty-nine percent believe global economic conditions will improve, up from 56 percent in the previous survey. When asked about their countries’ economies, nearly three-quarters of executives expect improved conditions in the next six months, up from 56 percent in January—the highest share to say so since the pandemic began and since we began asking the question in February 2004.25 In every region but Latin America, where executives are still more optimistic than pessimistic, a majority of respondents expect improvements in the months ahead.
Unemployment concerns also seem to be subsiding, compared with the past few months when pluralities or outright majorities of respondents predicted an increasing unemployment rate at home. Now, 43 percent of respondents expect a decline while 38 percent expect an increase, though there are notable differences by region. A majority of respondents in Europe still anticipate rising unemployment (which was true in the past two surveys), while those in North America are the most likely of their peers to expect a decrease in unemployment: 69 percent say so, while only 16 percent in the region predict an increase.
At the company level, positive expectations are also hitting new highs. Sixty-three percent of executives believe that demand for their companies’ products and services will increase in the months ahead, versus 39 percent who said the same one year ago, while 65 percent expect their companies’ profits will increase—the largest share to say so in three years. Workforce expectations remain stable, with a plurality of respondents saying their head counts will stay the same as they have throughout the pandemic. Thirty-seven percent, however, expect their workforce size to increase—the largest share to say so since before the pandemic.
Despite the overall optimism, the COVID-19 pandemic still looms largest as a risk to economic growth in respondents’ countries. The pandemic is cited most often, followed by unemployment and domestic political conflicts, and is the most common risk in every region but Latin America and India. As in the previous survey, executives in Latin America and in Europe cite unemployment more often than their peers—and this month are followed closely by those in India—although the shares saying so have fallen since January.
For respondents’ own companies, weak demand remains the greatest threat to growth, though increasing industry competition has risen in the ranks. Across sectors, respondents in consumer packaged goods and retail are the most likely among their peers to say so: 41 percent cite it as a risk to company growth, versus 28 percent of those in all other industries.
For more detail on the survey’s results, please see the exhibits below and our longer article, “Economic conditions outlook, March 2021.”
This update was edited by Daniella Seiler, a senior editor in the New York office.
McKinsey’s original survey research
January 2021
Economic expectations remain high but have tempered since December, and executives in Latin America and in Europe are less confident than their peers about the future.
After sounding a note of optimism at the end of 2020, respondents to our newest McKinsey Global Survey are greeting 2021 with high hopes for the economy’s prospects.26 Majorities of executives continue to believe that conditions in their home economies and in the global economy will improve over the next six months. Yet their positivity has moderated since the previous survey; compared with December, smaller shares of respondents now predict that economic conditions will get better.27
Within regions, there are a few changes of note. In India, respondents are now nearly as positive about their own economy’s future as are those in Greater China28 (who, since March, have been the most optimistic about economic conditions at home)—and those in India are also the most upbeat about the global economy’s prospects. But in several other regions, sentiment has taken a negative turn. In Asia–Pacific and in Europe,29 the shares of executives expecting their home economies to improve decreased by 15 and 11 percentage points, respectively, since December. The decline in optimism is most acute in Latin America, where 30 percent of respondents now expect improvements in their home economies. In the previous survey, 56 percent of executives there said the same.
In Latin America as well as in Europe, respondents are also more concerned than those elsewhere about unemployment. Across regions, they are the most likely executives to expect rising unemployment rates in their home countries (60 percent in Latin America say so now, up from 44 percent in December) and to cite unemployment as a threat to economic growth at home. In fact, respondents in Latin America cite unemployment as the biggest risk to growth—even bigger than the pandemic, which is the most commonly cited risk on average and in every other region.
And while most respondents continue to expect rising demand and profits for their own companies, over the next six months, executives in Europe and Latin America are the least likely to say so. For Latin America, this is a stark contrast with responses from December, when respondents in the region reported well-above-average predictions for both demand and profits.
When asked about nine scenarios for the pandemic’s effects on GDP, executives also report more tempered views. They continue to cite A1—characterized by localized occurrences of the virus and partially effective economic responses—as the most likely for their own countries and the global economy. But the shares of respondents ranking any of the three scenarios where the virus’s health impact is contained have fallen since December. In the previous survey, 44 percent of respondents said that one of the containment scenarios was most likely for their home economies, and 39 percent said the same for the global economy. This month, only 32 percent and 28 percent, respectively, rank a containment scenario as most likely.
For more detail on the survey’s results, please see the exhibits below.
This update was edited by Daniella Seiler, a senior editor in the New York office.
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December 2020
Executives’ views on the economy continue to brighten as they look ahead to 2021.
In our latest McKinsey Global Survey on the economy,30 executives are ending a year of global crisis and profound uncertainty on a relatively positive note. Their predictions for the future, and for their own companies’ prospects, remain much more optimistic than not. Executives in Europe, North America, and developing markets31 report more acute concerns than others about the economy, and those in Europe remain especially worried about unemployment. But even these respondents are less downbeat than they were in the previous quarter. At the same time, executives cite a couple of growing risks to their companies’ growth in 2021: industry-wide competition and disruptions.
Looking ahead to next year, respondents’ expectations for their home economies are increasingly positive: 63 percent say economic conditions in their countries will be better six months from now, up from 54 percent who said the same in mid-October. Meanwhile, the global outlook has bounced back. After some peaks and valleys in recent surveys, 61 percent of respondents now predict global conditions will improve in the months ahead. What’s more, respondents are the likeliest they’ve been in the last three years to expect the global economy’s growth rate will increase. Sixty-eight percent predict increasing growth now, with only 24 percent predicting a contraction—the smallest share to say so all year.
Interestingly, amid the rising positivity in other results, respondents’ views on nine crisis-related economic scenarios are holding fairly steady.32 As in the previous survey, scenario A1 (characterized by localized recurrences of the virus and partially effective economic-policy responses) is cited most often as the likely scenario for the global economy and for respondents’ own economies. That said, the share of executives selecting A1 as the most likely global scenario has declined. One-quarter of all respondents now identify it as most likely, down from the 31 to 36 percent who have said so since our April 2020 survey. After A1, the largest share of respondents cite B1 as the most likely global scenario (20 percent), then B2 (cited by 16 percent). (For more information on each scenario, see “Nine scenarios for the COVID-19 economy.”)
With respect to their companies’ prospects, executives remain optimistic—and increasingly so. For the first time this year, respondents are more likely to say the size of their workforces will increase than to predict a decrease.
Yet responses to our latest survey also suggest some emerging threats to company growth. While weakening demand and changing customer needs remain the top-two risks (as they have been in the previous four surveys), the share of respondents citing demand concerns is the lowest it has been since March. At the same time, industry competition has risen in the ranks: it’s now selected fourth most often, compared with ninth in October. Competition and another industry-wide issue, business-model disruptions within respondents’ sectors, together are now cited by 44 percent of respondents, up from 34 percent previously.
For more detail on the survey’s results, please see the exhibits below and our longer article, “Economic Conditions Snapshot, December 2020: McKinsey Global Survey results.”
This update was edited by Daniella Seiler, an editor in the New York office.
October 2020
Since September, executives have maintained more positive than negative outlooks for the world economy, national economies, and their own companies.
Even as nations around the world fight a recent rise in the number of COVID-19 cases,33 responses to our latest McKinsey Global Survey on economic sentiment34 suggest that executives’ views have largely held steady from September. Outlooks on the economy and company prospects have remained more positive than negative, though optimism on the global economy has tempered. The share of respondents expecting global conditions to improve has decreased to 51 percent. But the share predicting that conditions will stay the same has increased since September, while the share expecting worsening conditions—which remains at the lowest level since the COVID-19 outbreak was declared a pandemic in March—has not changed. A majority of respondents (57 percent) also expect the global growth rate to increase over the next six months, as was the case in September.
Overall, expectations about executives’ national economies remain in line with the September results, with 55 percent saying they expect improvement in the next six months. Outlooks continue to brighten in all but two regions. One of these is Greater China,35 where positive sentiments are still more common than in any other region. The second region where outlooks have moderated is Europe. It has become the only region in which respondents are more likely to expect their countries’ economic conditions to decline than to improve.36
The findings also show changing views about the COVID-19 crisis’s effect on domestic and global GDP. When asked which of nine crisis-related scenarios respondents think is likeliest in their countries, they most often select scenario A1, which is characterized by partially effective policy and public-health responses, rather than September’s most-cited scenario, B1, which involves virus containment, sector damage, and a lower growth rate over the long term. At the global level, respondents also choose scenario A1 most often, as they have since April. However, scenario B2—marked by virus recurrence and slow long-term growth—has replaced B1 as the second-most-cited scenario for the world economy. (To learn more about the scenarios and how respondents in selected countries rate the likelihood of each one, currently and over time, see “Nine scenarios for the COVID-19 economy.”)
As for respondents’ expectations for their own companies, the shares reporting positive expectations for profits and demand are the largest since the pandemic was declared. The 55 percent of respondents expecting their companies’ profits to increase in the coming months is more than double the share who said so six months ago. A similar share—56 percent—predict that customer demand will increase.
For more detail on the survey’s results, please see the exhibits below.
This update was edited by Heather Hanselman, an associate editor in the Atlanta office.
September 2020
Executives are more hopeful about the economy—and their own companies’ performance—than they have been since the COVID-19 crisis began.
Six months after WHO declared COVID-19 to be a global pandemic,37 the responses to our latest McKinsey Global Survey suggest a positive shift in economic sentiment.38 More than half of all executives surveyed say economic conditions in their own countries will be better six months from now, while another 30 percent say they will worsen: it’s the smallest share of respondents all year to expect declining conditions. And except for those in developing markets,39 respondents in every region are more likely to predict that conditions will improve than that conditions will worsen. That is even true of those in North America, where, between June and July 2020, respondents’ outlooks had taken a negative turn.
The share of respondents predicting improvements in the global economy has also grown over the past few months. Now 57 percent say so, compared with 52 percent in June and 25 percent in March. Across regions, emerging-economy respondents report more positive views on the global economy than their peers do: 73 percent expect global conditions to improve in the next six months, compared with 49 percent in developed economies—a much greater gap than previous surveys this year.
Likewise, hopes are increasingly high for respondents’ own companies. For the first time in 2020, majorities predict that both demand and profits will increase in the months ahead.
The survey results also suggest shifting views about the COVID-19 pandemic’s impact on GDP, at least close to home. When asked which of the nine pandemic-related scenarios is most likely, respondents continue to pick the same scenario for the global economy as they have since the spring: A1, characterized by partially effective policy and public-health responses and a years-long economic recovery. But for respondents’ own economies, executives now select a scenario that involves virus containment, sector damage, and a lower growth rate over the long term (B1) most often.
For more detail on the survey’s results, please see the exhibits below and our longer article, “Economic Conditions Snapshot, September 2020: McKinsey Global Survey results.”
This update was edited by Daniella Seiler, an editor in the New York office.
July 2020
In North America and developing markets, respondents’ economic outlook is less favorable than in June. Across regions, views are more uncertain on COVID-19 recovery but more hopeful on company prospects.
Nations around the world are struggling to contain the COVID-19 pandemic and its economic impact, and responses to our latest McKinsey Global Survey on the economy highlight the magnitude of the challenge—especially in certain geographies.40 In North America and in developing markets, executives have become less hopeful since early June about their countries’ economies and more cautious than others in their views on potential scenarios for COVID-19 recovery. Overall expectations on these scenarios also suggest growing caution and uncertainty. Even so, respondents’ outlook for their own companies continues to brighten. For the first time in 2020, respondents are more likely to expect their companies’ profits to increase than decrease in the months ahead.
On the whole, executives maintain the more positive than negative outlook they reported in June, for both the world economy and their home countries,41 and they are less likely than in previous months to expect declining growth rates globally and at home. While respondents’ outlooks about their countries’ economies have improved in most regions over the past four surveys, responses in North America and developing markets have taken a negative turn since June.42 What’s more, when asked about COVID-19’s effects on domestic GDP, respondents in North America and developing markets are much less likely than last month to select one of the more optimistic options out of nine scenarios.43
Across all geographies, views on the COVID-19 recovery have also become less favorable. In June, the optimistic A3 scenario (in which the virus is contained and growth returns slowly to precrisis levels) and A1 scenario (in which public-health and economic-policy interventions are partially effective, and the return to precrisis levels of GDP, income, and corporate earnings will take time) were selected most often as outcomes for respondents’ home economies. Now, the largest share of respondents rank A1 as the likeliest outcome for their own countries in the next year, followed by B2, in which public-health interventions are effective but do not prevent virus reoccurrences, and economic-policy interventions are insufficient to deliver a full recovery to precrisis levels. Similarly, when asked about these scenarios at the global level, respondents most often choose A1, as they have since April, and B2 has replaced the more optimistic A3 as the second most cited scenario for the world economy.
Respondents are more upbeat when considering their companies’ prospects over the next six months. In each survey since April, a growing share of respondents have expected their companies’ profits to increase. For the first time in 2020, respondents are now more likely to predict an increase than a decrease.44 Furthermore, the share of respondents who say they expect customer demand for their companies’ products or services to weaken in the months ahead has continually decreased since April.
By industry, respondents in automotive and assembly; healthcare services, pharma, and medical products; and travel, transport, and logistics—all sectors hit especially hard by the pandemic’s knock-on effects—are much more likely now than in June to expect demand for their companies’ products or services to increase in the months ahead. In contrast, respondents in retail, one of the most optimistic segments in the June survey, have become much more downbeat.
For more detail on the survey’s results, please see the exhibits below.
This update was edited by Heather Hanselman, an associate editor in the Atlanta office.
June 2020
In our latest survey on the economy, executives’ overall outlook for the future continues to improve.
As the world grapples with the COVID-19 pandemic that continues to affect a growing number of countries and people,45 the responses to the latest McKinsey Global Survey on the economy suggest increasing optimism.46 Executives report ever-more-positive expectations for company demand and profitability—two months after reporting record pessimism on both fronts—and for their countries’ economic prospects.
While executives’ views on company profits remain more negative than positive, the share expecting increased profitability has grown. Respondents are more likely to expect customer demand will increase than decrease; two months ago, the opposite was true.
By industry, more than half of respondents in retail and in high tech and telecom expect demand to rise. Retail executives also report a much more optimistic view on demand since the April 2020 survey, as do those in capital projects and infrastructure.
When asked about the economy’s future, respondents are cautiously but increasingly optimistic. Fifty-one percent say the world economy will be better six months from now, a share that has grown throughout 2020. Similarly, one-half of respondents expect conditions in their home economies to improve; in May, 43 percent said so, up from 36 percent in April and 26 percent in March. Except in Greater China, India, and Latin America—where respondents’ outlooks have held steady—executives in every region are more likely than in May to expect improvements.
What’s more, the share of respondents expecting global and domestic growth rates to increase in the next six months has grown since April and May.
For more detail on the survey’s results, please see the exhibits below and our longer article, “Economic Conditions Snapshot, June 2020: McKinsey Global Survey results.”
This update was edited by Daniella Seiler, an editor in the New York office.
May 2020
Economic sentiment has improved since last month, per our latest survey of global executives on COVID-19 and the economy. Still, their near-term outlook remains more negative than positive.
Since early April, a growing number of businesses and governments around the world have begun to reopen, ushering in a new—if tenuous—phase of the coronavirus situation. Likewise, the results from our latest McKinsey Global Survey on the economy (conducted from May 4 to May 8, 2020) point to an improving outlook.47 Executives are much likelier now than in April or March to expect improving conditions and increased growth rates in the months ahead.
Yet executives are still more negative than positive in their expectations for their home economies and the world economy at large, as they were one month ago. And as the results show, the path to a next normal looks very different across regions and industries. Executives in Greater China48 were the most optimistic about domestic economic conditions in April and remain so this month: 75 percent expect conditions to improve in the next six months, up from 63 percent previously. Half of that share—just 34 percent—say the same in Europe. But even respondents there are notably more positive about their economies than they were one month ago. Among all regions, respondents in India report the largest shift toward positive sentiment since last month.
McKinsey Global Economics Intelligence
At the company level, respondents most often cite weak consumer demand as a threat to their organizations’ growth. But other risks loom large in certain sectors. Respondents in financial services, for example, cite volatile financial markets as the biggest threat to company growth. And according to respondents, supply-chain disruptions present an outsize risk in several industries—namely, pharma, chemicals, consumer and packaged goods, and automotive and assembly. What’s more, when we asked respondents in industrial and manufacturing sectors about value-chain disruptions resulting from the coronavirus,49 only 15 percent say COVID-19 has not caused a material disruption to their value chains, and another one-third say the current disruption is the worst their companies have ever experienced.
For more detail on the survey’s results, please see the exhibits below.
This update was edited by Daniella Seiler, an editor in the New York office.
April 2020
In our latest survey, global executives report a gloomier outlook than one month ago. Two-thirds expect a sizable contraction in the world economy, and a record share predict declining company profits.
As the COVID-19 pandemic spreads quickly across and within geographies, executives share growing concerns about its economic impact—and, varying by region, dramatic shifts in their views since the beginning of March.50 Responses to our latest McKinsey Global Survey on the economy,51 conducted from April 6 to April 10, show that overall sentiment is more negative than it was just one month ago: for example, two-thirds of respondents expect a moderate or significant contraction in the world economy’s growth rate—that is, a recession or a depression. In early March, only 42 percent said the same. And 56 percent say the same thing about growth in their home economies, up from 24 percent one month ago.
Respondents’ overall outlook for their home countries and the global economy has changed less in the past month, though their views remain decidedly downbeat. At least six in ten believe that conditions in their home economies and in the global economy will worsen in the coming months. At the company level, prospects are especially grim. Respondents are nearly twice as likely as they were one month ago to say that the profits of their companies will decrease in the next few months; at 61 percent, that is the largest share to report a negative outlook on profits since we began asking the question, in the wake of the 2008 financial crisis.52
Even so, the results point to some bright spots. When asked about nine scenarios for the pandemic’s impact on GDP, a majority of respondents say the four more positive scenarios are most likely to play out in the next year (exhibit).53
As for the prospects of national economies, respondents in China54 are much more optimistic than those elsewhere, even compared with their counterparts in the rest of Asia—and much more positive than they were one month ago. Respondents in North America are also likelier than others to expect improvements in the months ahead, even though the number of US cases of COVID-19 exceeded China’s two weeks before the survey was in the field.55 Respondents in Latin America expect their economies will be hardest hit in the near term, compared with other regions, and sentiment there—as well as in most other geographies—has become more negative since the previous survey.
For more detail on the survey’s results, please see the exhibits below.
This update was edited by Daniella Seiler, an editor in the New York office.
