Executives expect global business conditions to improve within 12 months

But levels of optimism vary, Economist Intelligence Unit survey reveals

22 Jun 2009 -- For the first time since World War II, global GDP is expected to shrink this year. Worldwide consumption is down, stock markets have been hit, trade has slumped and employment has declined. But according to a survey conducted by the Economist Intelligence Unit, and sponsored by SAP, global business conditions are set to improve.

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The May 2009 survey asked 1,032 executives and managers around the world, representing a range of industries and company sizes, for their perceptions of business conditions over the coming 12 months. The findings are presented on the interactive Corporate Expectations Barometer website at www.eiu.com/sponsor/barometer where executives are invited to benchmark themselves against peers. The results are also published in Corporate Expectations Barometer: Baseline report of expectations.

Overall, respondents are optimistic. Executives who expect conditions to improve in the next year outnumber those who think they will worsen by two to one. However, the level of optimism differs greatly by industry and regional location. Other key findings include:

* Sectoral differences. Executives in the energy and technology industries are most optimistic about prospects for their industries: those expecting conditions to improve outnumber those anticipating a deterioration by a margin of four to one. Respondents in healthcare and the public sector are least hopeful.
* Regional differences. Executives in Asia-Pacific who believe business conditions will get better in their region outnumber those who expect conditions to worsen by nearly four to one. But in Eastern Europe and Latin America, more executives are pessimistic about the outlook.
* Best prospects closest to home. Executives are more bullish about prospects for their own companies than they are about prospects for other sectors of the economy.

The results of the survey have been used to calculate the Corporate Expectations Barometer, an ongoing index of business perceptions that has just been launched online. On a scale of 0 to 10, with 10 being the most sanguine, the average expectation for the next 12 months is 6.3. This index is an average of five scores: respondents were asked to assess business prospects for their company, their industry, their country, their region and globally. The following scores will form the baseline for the ongoing index:

Overall index—an average of the five scores below 6.3
Company score—prospects for “your company” over the next 12 months 7.1
Industry score—prospects for “your industry” over the next 12 months 6.3
Country score—prospects for “your country” over the next 12 months 6.2
Regional score—prospects for “your region” over the next 12 months 6.1
Global score—global business prospects over the next 12 months 5.9

Source: EIU