Chief executive officers are less confident about economic conditions in every major region across the globe, according to a quarterly survey of top business executives.
The US, while the strongest market globally, is not immune. Confidence in the US dropped for the third consecutive quarter, according to the latest Young Presidents’ Organization Global Pulse survey, CNBC reported.
The erosion in confidence results from the belief among CEOs that the global economy has softened in the past six months and will continue to weaken six months from now.
In July, 37% of CEOs said that the economy had improved in the previous six months. In the just-completed October survey, it slipped to 31%. Looking ahead, the dip in confidence is similar. In July, 44% of survey respondents thought the economy would improve in the next six months. By October, 9% fewer CEOs thought that was likely to happen.
The US Index fell 2.9 points in October, to 59.9, a reading that suggests moderate growth in the quarters ahead, according to Stephen Slifer, YPO Global Pulse economic advisor and chief economist at NumberNomics.
The Global CEO Index fell 2.8 points to 58.1. The steepest decline among the nine global regions surveyed was Asia, where confidence dropped 4.7 points to 57.3.
Asia Index
“Fears about the extent of the slowdown in the Chinese economy, its impact on developing countries in Asia, the drop in commodity prices and the ongoing debate about the timing of the Fed’s first rate hike are taking a toll,” Slifer said.
The reversal in Asian regional confidence marks a significant, but not surprising, reversal in what had been the globe’s biggest growth story out of the financial crisis. Five years ago, confidence in Asia was consistently five to 10 points higher than the Global Index. But developments in China have brought expectations back into line with the rest of the world. The outlook for Asia is not “bleak,” Slifer said, but simply not as euphoric as it once was.
Europe’s Decline
Confidence in the European Union fell 1.4 points in October to 60.2, which Slifer attributed to the belief that slower growth in Asia was effectively countered by further easing measures by the European Central Bank, a sharp decline in the value of the euro, and the stimulative impact caused by falling gasoline prices.
From 2009–2013, EU confidence was consistently five to 10 points lower than the Global Index due to the various debt crises in European countries.
Falling commodity prices have slammed Latin America, where confidence fell to 49.6, slipping below the key 50 index-reading threshold—the only global region to decline below the baseline for a positive outlook. Oil-exporting nations, like Brazil, Venezuela and Ecuador, have pushed the regional economy into recession.
Business confidence in Africa fell to an all-time low for the YPO Global Pulse survey of 54.3 and experienced the third-largest decline overall among regions in the third quarter, behind non-EU Europe and Asia.
