Global economic outlook improves, China regresses

6 August, 2020 12:00 AM printer

BEIJING: Business sentiment about the three-month outlook for the global economy has improved markedly but not at such a rate that would suggest a recovery any time soon, according to a study released this morning by the Economist Intelligence Unit.

Sentiment in Europe increased the most, followed closely by the Asia-Pacific and North America. In the Middle East and Africa, the outlook was improved but still muted, report agencies.

The single biggest swing in the EIU’s second annual Global Business Barometer came from China, where executives’ outlook for the domestic economy declined dramatically as the Chinese government abandoned its annual GDP target for the first time in decades and the country faces a second wave of the virus.

Across the globe, executives recognise the economy and their businesses are still operating in “survival mode”, but that as of late May many executives have made adaptations to their operations, some of which may become permanent.

There was an uptick in the percentage of survey respondents answering that the global economic recovery may take 3 to 5 years.

When asked what actions they would like to see governments take in the coming months to get the global economy and businesses back on track, limiting international travel surged to the number one answer, up from the bottom of the list just one month prior. This put it ahead of other options such as direct fiscal stimulus to consumers and tax cuts.

Now that travel restrictions have been demonstrably effective in many instances against the spread, we see a mix of resignation and adaptation amongst executives on the issue.

These findings were based on a survey of 2,758 executives from 118 countries, although the study focuses on 14 countries in North America, Europe and the Asia-Pacific for core readings as they together account for nearly 70% of global GDP and 56% of global trade (World Bank and IMF data).

Since then, a spike in coronavirus infections in the US has forced a number of states to cancel plans to reopen their economies, with Florida recording the highest daily rise of around 10,000 new infections.