Confidence about near-term sales growth among chief executives around the world has fallen to its lowest level in six years as China’s economic engine slows and a slump in oil prices signals deep unease about the global outlook.
A survey of more than 1,400 CEOs released on Tuesday on the eve of the annual World Economic Forum in Davos paints a gloomy picture, as corporate leaders contemplate a rising tide of threats.
Despite the trillions of dollars of stimulus and ultra-easy money that central banks have pumped into the system since the 2008 financial crash, just 27% of CEOs expect global economic growth to improve over the next 12 months, compared with 37% at the same time last year.
China, whose demand helped bring the world back from the brink last time around, is at the centre of concerns.
“You’ve got the second largest economy in the world that until now has seen very, very good growth rates when many others were really struggling, and now we are seeing a real slowdown,” said Dennis Nally, chairman of PwC, which conducted the annual corporate health check.
“There are big concerns with regard to currency and the stockmarket, and there are real questions about what this means for China’s ability to transform its economy,” he said.
The latest official data on Tuesday showed China’s growth in 2015 was 6.9%, the lowest in a quarter of a century, adding to problems facing the government as it tries to transition from a centrally planned to a more market-oriented economy.
There is little to cheer CEOs elsewhere in the world. “Europe and north America are doing okay but if you look at many emerging markets, there are real concerns,” said Alex Molinaroli, chief executive of industrial group Johnson Controls.
Mr Molinaroli, whose company has major operations in China, does not think the country’s economic fundamentals are as bad as the recent slump in the local stock market might suggest, but he worries about the ripples spreading from China.
“We’re seeing the impact on commodities, especially oil, and that is going to have major ramifications. The energy sector is what has got everybody as nervous as anything else,” he said.
Only 35% of CEOs in the PwC survey said they were “very confident” of growing their company’s revenue in the next 12 months, down from 39% in 2015 and the lowest reading since 2010. Confidence among US bosses fell to 33% from 46% in 2015, echoing similar declines in other western countries.
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