Business leaders around the world in the second quarter became less optimistic about the global economy, according to a recent survey released by the American Institute of CPAs.
According to the survey of 609 CEOs, CFOs and senior management accountants taken during May and June, business leaders remain slightly positive about the global and domestic economic outlook for the next 12 months but the results are down sharply from the first quarter of the year.
Business leaders and senior accountants in emerging countries have a more optimistic outlook for the future of their own economies than do those in the United States and Europe.
The survey was conducted by the American Institute of CPAs and the Chartered Institute of Management Accountants and released Tuesday as the Global Economic Forecast of the Chartered Global Management Accountant, a joint venture between the two institutes. It included responses from business leaders in 60 countries.
The system devised by the institutes combines 10 measures of economic outlook and sets a scale of one to 100 with 50 being neutral and lower numbers indicating a pessimistic outlook and higher numbers indicating an optimistic outlook. Included in the measurement are such things as feelings about the global economy, about the respondent's domestic economy, about the expectations for business expansion and hiring, and expectations for revenue and profits in the respondents' companies.
The overall feeling about the economy dropped seven points to 58 since the first quarter of the year. The largest drop was seen in the executives' view of the global economy, which dropped 11 points to 26 on the institutes' scale. The low rating shows a deep concern on the part of executives, says the report.
"Although the CGMA Global Economic Index is still slightly above neutral, the pullback in overall optimism points to an unclear future in which companies must be prepared to address a variety of economic scenarios," says Arleen Thomas, American Institute of CPAs senior vice president for management accounting.
In the U.S., only 36% of those surveyed are optimistic about the domestic economy, down from 44% in the previous quarter. At the same time, 51% of U.S. respondents are optimistic about prospects for their own companies' future, a decrease of 7 points over last quarter.
Respondents reported expecting lower revenues and profits for their companies than they did in the previous quarter.
The one area where improvement is seen was in the concern about inflation. The fear of inflation of U.S. respondents dropped to 33% for the second quarter from 49% the previous quarter, which is based on the recent fall in commodity prices, the report says.
Dividing the respondents by industry, those in the finance and insurance industry are the most optimistic with 53% expecting a good future. They are followed by those in the retail and wholesale trades where the optimists and pessimists were split evenly at 50%. Those in banking came in at 48% optimistic, in manufacturing at 45%, and in technology at 41%.
-Karen DeMasters