Deloitte: Global Optimism About Growth
As global economies grow in sync for the first time in a decade, optimism surpasses uncertainty among private companies when it comes to their expectations and investment plans, according to Deloitte.
In fact, 89% of global private companies are confident in their business’ success over the next two years, and two-thirds of private company executives believe their revenue will rise in the year ahead.
The full report is available at: “Global perspectives for private companies: Plans, priorities, and expectations.”
Surveying almost 1,900 executives in 30 countries, the majority of respondents expect revenue, profits, productivity, and capital investments to increase in the year ahead.
Additionally, 45% expect to hire more full-time employees.
Despite these expectations, 53% of respondents perceive a greater level of uncertainty about future business prospects.
“The optimism of private companies worldwide reflects an economic alignment taking hold for the first time in years,” said Mark Whitmore, Private Global leader of Deloitte Canada.
While private companies are generally optimistic across the globe, the survey revealed some differences in perceived risks to growth in different regions.
Respondents in the Americas expressed concern about the uncertain economic outlook in their home countries, while respondents in the EMEA region (Europe, Middle East and Africa) point to hiring as a top challenge, and Asia Pacific respondents identified raw material costs as a barrier to growth.
However, executives worldwide consistently cited geopolitical uncertainty as a top risk to growth.
Furthermore, respondents from each region identified market disruptors, foreign exchange fluctuations, weaker domestic market demand, increased regulatory requirements, and technology costs as principal threats.
To counter these risks, 35% of respondents are focused on increased productivity, while 33% of respondents are aiming to develop new products and services and to grow existing markets.
Nearly eight out of 10 private companies say they rely on international markets for some portion of revenue, and almost half (43%) rely on international markets for more than a quarter of their revenue.
Over the next year, only 10% expect a decrease in the proportion of their company’s revenue that will come from outside their country.
Sentiments on supply chains also point to increasing global economic integration and a shared sense of optimism. About 84% that global trade is important to their supply chain.
Against the backdrop of rapid technological development, private companies are embracing digital disruption for competitive gains. Two-thirds of respondents associate tech advances with new opportunities and positive outcomes.
Despite limited mergers and acquisitions activity in the last year, the survey signals a potential bounce back for M&A as a tool for strategic growth.
Nearly seven in 10 respondents expect to be a part of M&A activity over the next year, with 42% anticipating that they are likely or very likely to acquire targets in the next year.
The reasons for this vary; 33% cite the opportunity to enter new global markets, and 32% point to the opportunity to expand and diversify their client base.
Deloitte provides audit, consulting, tax and advisory services to companies worldwide. Its Deloitte Private group is focused on serving private clients. www.deloitte.com