Muted ring of confidence

The online survey conducted earlier this month received responses from over 2000 executives around the world. While it indicated companies are coping with the new economy, the results also suggest that executives’ confidence is tenuous. For example, more expect economic conditions to improve than not, but fewer say so now than did earlier this year. Notably, the share of respondents expecting better conditions in six months’ time  is lower than it was year ago: 55 percent now, compared with 61 percent in September 2009.

Furthermore, optimism on the current state of the economy compared with six months earlier started to fall in June and has taken sharp dive in the past month. Compared with August, the number of executives saying the economy is better now dropped 10 percentage points. The slide is particularly notable in North America. But it’s common theme around the world and is exemplified by feeling of exasperation among significant number of companies operating in the domestic service sector in New Zealand which, if anything, are finding business tougher going than at the height of the recession.

Among the lasting changes that executives say the downturn has produced in their organisations are greater attention to changes in markets, improved risk management, and much stronger consciousness of costs. More than half of respondents have changed the criteria they use to make capital investment decisions, most by applying more rigorous due diligence.

• Visit McKinsey Global Survey for more information.

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