Global CFOs now have a more positive economic outlook for China than the U.S., survey shows

Chinese and U.S. flags flutter close to The Bund, earlier than U.S. commerce delegation meet their Chinese counterparts for talks in Shanghai, China July 30, 2019.

Aly Song | Reuters

Today the world’s main chief monetary officers have a more positive outlook for China’s economic system than they do for the economic system of the United States. The Q3 CNBC Global CFO Council Survey revealed on Friday. That is the first time in the survey’s historical past that this elite corps of executives had been more upbeat on China.

In the newest survey, CFOs gave a mean outlook of “Stable” for China’s GDP, whereas seeing the U.S. economic system as “Modestly Declining.” Around the world, GDP outlook was typically improved from the second quarter survey, when no area was seen as steady. This quarter, together with China, the council upgraded the remainder of Asia and the Eurozone from “Modestly Declining” to “Stable.” Latin America went from “Strongly Declining” to “Modestly Declining”. But the U.S. economic system was seen as “modestly declining” for the second straight quarter.

The outlook echoes studies that China’s economic system is rebounding as life there begins to look more and more prefer it did earlier than the pandemic. In July, China stated its economic system grew 3.2% in the second quarter. The U.S. economic system decreased at an annualized charge of 32.9% in the similar quarter, the worst single-quarter decline in historical past.

China’s bounceback comes as the nation offers with the double-whammy of the pandemic and heightened tensions with the United States over commerce, know-how and geopolitics. It has been spurred by ramped up authorities stimulus to fight the coronavirus-led downturn.

What lies forward for the U.S. market

CFOs additionally struck a cautious tone about the inventory market. Despite a speedy restoration for shares from the market’s bottoming out in April, the council is cut up on the place the market is headed subsequent. Statistics inform the story. According to the survey, 42.5% say the Dow Jones Industrial Average will fall again beneath 25,000 earlier than it reaches 30,000 for the first time. Nearly one-third of executives (27.5%), suppose the document excessive will come earlier than one other downturn for the Dow.

The downbeat outlook for the U.S. economic system and the markets displays the continued state of uncertainty for giant corporations in the face of the Covid-19 pandemic. Twenty-five of the 40 CFOs who responded to this quarter’s survey known as the pandemic the greatest exterior threat dealing with their corporations, whereas 80% say the pandemic will have a unfavorable or very unfavorable influence on their firm this 12 months. Only one CFO stated the pandemic might be positive for their firm.

One means many companies will handle the unfavorable influence is thru layoffs. More than half of respondents say they count on their firm’s web headcount to lower over the subsequent 12 months. Just about a quarter of CFOs stated the similar a 12 months in the past. And regardless of enhancing economic conditions in Asia in comparison with different components of the world, CFOs in the APAC area had been a lot more prone to say they count on their headcounts to lower in comparison with their U.S. friends.

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