Business leaders looking forward to better prospects in global economy

MANILA, Philippines – After almost two years of extreme belt-tightening and drop in profit, most of the world’s executives now have a brighter outlook on the global economy, according to research by advisory firm McKinsey & Co.

The survey of more than 2,000 global executives across various regions and industries revealed that 51 percent of respondents believed that the world economy has been on the mend.

The survey was conducted from September 8 to 13.

A higher percentage, or 58 percent, said their own countries have been recovering from the global recession as well.

This upbeat mood led the majority, or 70 percent, of those polled to project a profit rise this year vis-à-vis 2009.

Thirty-eight percent also said they expected to increase their headcount by year’s end—the biggest percentage of positive responses for this category since before the crisis hit in late 2008.

Despite this relatively rosy outlook, the research and advisory firm noted the cautiousness of global executives with regard to making projections for the future, particularly with respect to the world economy.

Of the more than 2,000 respondents, only 5 percent said they expected their own country’s economy to be substantially better.

Half of those polled said their country’s economy would be better, but only moderately.

Around a third of respondents, or 31 percent, believed their own country’s economy would stay the same, while 13 percent said it would be moderately worse.

In coping with the downturn, executives worldwide noted how some changes, many of them likely permanent rather than temporary, took place in their organizations.

“Among the lasting changes that executives say the downturn has produced in their organizations are greater attention to changes in markets, improved risk management, and much stronger consciousness of costs. More than half of respondents have changed the criteria they use to make capital-investment decisions, most by applying more rigorous due diligence,” McKinsey said.

The results of the McKinsey survey mirrored those of another survey conducted by various American chambers of commerce in the Association of Southeast Asian Nations.

According to the Asean Business Outlook Survey 2010, 86 percent of US companies operating in the Philippines expected the economy to expand, while none of them saw a contraction in the near term.

Seventy-two percent of respondents said they expected an increase in profit this year, a significant jump from last year’s 42 percent.

Executives forecasting an increase in net income next year also went up to 76 percent this year, from 59 percent in 2009.

More than half of the respondents, or 51 percent, likewise planned to expand their employee base for the first time since 2008. –Abigail L. Ho, Philippine, Daily Inquirer