Economic Conditions Snapshot,

September 2015
McKinsey Global Survey results

Executives views deteriorate amid rising concerns over volatility and expectations for only modest
growth in China.
Executives are more downbeat about the state of the global economy now than at any time this year,
according to McKinseys latest survey on economic conditions.1 Recent turmoil in global markets has
fueled concern over the strength of respondents home economiesand of the world economy, too.
At the same time, executives cite volatile economic conditions and exchange rates as emerging threats to
both domestic and global growth in the short term.
A majority predict that oil prices will stay low in the next year, which could potentially spur future growth.
Its unclear, though, how much a growth spurt from oil prices could offset the economic risks posed by
increased volatility. Executives in emerging markets are particularly concerned with volatility at home
especially in China, where four-fifths of respondents say their economy has worsened in the past six
months. Across regions, the domestic and global economic outlook for the coming months is more tempered.
The same is true of expectations for Chinas economy, which most respondents believe will meet (or come
close to) the Chinese governments 2015 growth target of 7 percent.2

Jean-Franois Martin

Volatility
on the rise
Survey
2015
As
a risk to short-term
growth,
volatility is cited more often now than in previous surveys. At
Economic
snapshot,domestic
September
2015
home, volatile
Exhibit
1 of 6economic conditions and exchange rates are greater worries for emerging-market
executives, especially in China (Exhibit 1). Forty-nine percent of executives there cite overall economic
volatility as a risk to domestic growth in the next year, compared with 27 percent of other respondents.

Exhibit 1

Increasing volatility is a heightened concern among emerging-market executives

especially those in China.
% of respondents, by office location
Potential risks to domestic economic growth,1 next 12 months
China,
n = 91

All other regions,

n = 1,797
52

Low consumer demand

49

Increased economic volatility

38

New asset bubbles

31

Increased volatility of exchange rates

Insufficient government-policy support

1 Out

of 12 risks that were presented as answer choices.

34

18

27

16

21

32

Survey 2015
Economic snapshot, September 2015
Exhibit 2 of 6

Exhibit 2

For emerging-market executives, volatility and low demand have risen as risks
to global growth, while geopolitical issues have fallen.
% of respondents working in emerging markets
Potential risks to global economic growth,1 next 12 months
March 2015,
n = 654

June 2015,
n = 471

Sept 2015,
n = 550

42

Increased economic volatility

37

72

Geopolitical instability

67

Increased volatility of
exchange rates

27

26

Low consumer demand

26

27

New asset bubbles

1 Out

18

48

19

46

44

41

20

of 12 risks that were presented as answer choices.

Volatility has also climbed as a threat to global growth in the near term. Forty-eight percent of all
respondents now cite economic volatility as a top risk for the next 12 months, up from 34 percent in June;
32 percent now cite exchange-rate volatility, up from 22 percent. Volatile exchange rates are a much
greater concern for emerging-market executives, who report that since June, geopolitical instability has
fallen as a risk to global growth (Exhibit 2).
When asked about scenarios for growth over the next decade, the largest shares of executives believe that
global downshift (low but resilient global growth) and pockets of growth (uneven, volatile, but high
levels of global growth) are likeliest to occur. Compared with the previous survey, though, executives are
more likely to identify rolling regional crises (volatile and weak global growth): 25 percent now say
its the most likely, up from 17 percent in June.
On the exchange-rate front, many executives expect the US dollar will outperform all other currencies in
the next six months. Three-quarters of executives in China and in Latin America 3 believe that their
currencies will depreciate against the dollar, and 60 percent of those in the United States say the dollar
will appreciate against the renminbi. A slightly larger share of respondents in the United States
(64 percent) expect the dollar to grow in value against the eurothough just one-third of eurozone
respondents say the same.

Survey 2015
Economic snapshot, September 2015
Exhibit 3 of 6

Exhibit 3

Compared with June, executives are roughly three times more likely now to say
that global economic conditions have worsened.
% of respondents1
Global economic conditions
Substantially better

Moderately better

The same

Expected conditions, in 6 months

1
17

20

53

26

9
1

2
June 2015,
n = 1,452

36

42

40
2

34

40

23

35

34

20

1 Figures

Substantially worse

Current conditions, compared with 6 months ago

Sept 2015,
n = 1,888

Mar 2015,
n = 2,283

Moderately worse

41

17
1

2
40

40

17

may not sum to 100%, because of rounding.

Widespread economic worry

In the past four surveys, executives consistently reported modest views of the global economy; they were
most likely to say that current conditions had held steady. But now, respondents in all regions are most
likely to say that the global economy is worse than it was six months ago. Sixty-two percent say economic
conditions have worsened (Exhibit 3)nearly three times the share that did so in June, making this
the gloomiest respondents have been about the global economy in the short term since June 2012.4 On
average, respondents most often expect conditions to worsen in the coming months as well.
Executives in some regions are more optimistic than others about the global economys short-term
prospects. For example, in India, 44 percent expect improved global conditions; 28 percent expect conditions will worsen, compared with roughly half of their peers in Latin America, China, and developed
Asia.5 Still, respondents in India are more than twice as likely now as in June to expect worse conditions.
And overall, emerging-market executives are much gloomier than their peers elsewhere: 76 percent
say the world economy has worsened in the past six months, compared with 56 percent of executives in
developed markets.

At the country level, respondents are more downbeat about short-term economic conditions than theyve
been all year, and concerns are particularly acute in Asia and Latin America (Exhibit 4). In March,
40 percent of executives in China believed that domestic economic conditions would be worse by now. But
in this latest survey, fully 80 percent say conditions have worsened since March.
Executives in China are slightly more optimistic about the future than the presentthough they are still
likelier than many other respondents (except those in Latin America) to believe domestic conditions
will worsen in the next six months. Their peers in developed Asia are equally apprehensive: 40 percent
expect worse conditions in the coming months, up from 23 percent in June and 16 percent in March.
This outlook for sluggish growth comes amid ever-lower expectations for oil prices in the next year.
Three months ago, the largest share of executives (45 percent) predicted that oil prices would
be $60 to $80 a barrel. Now the largest share (70 percent) expect that oil will cost between $40 and
$60 a barrel.

Modest prospects for Chinas growth

Given the most recent responses from China, its not surprising that when asked specifically about the
countrys economy, many executives report a cautious outlook. Forty-nine percent of all respondents
believe that, in the year ahead, a sharp slowdown in Chinas economic growth is very or extremely likely to
shock the global economy, up from 23 percent in the previous survey.

Executives in China are more optimistic about

the future of their home economy than the
present. But for the months ahead, they are
still likelier than many other respondents
to expect economic conditions at home
will worsen.

Survey 2015
Economic snapshot, September 2015
Exhibit 4 of 6

Exhibit 4

Across regions, respondents in China and Latin America are the most downbeat
about economic conditions at home.
% of respondents,1 by office location
Domestic economic conditions
Better

The same

Worse

Expected conditions, in 6 months

(Mar 2015)2

Current conditions, compared with

6 months ago (Sept 2015)3
1

93

India

51

Europe

Developing
markets

Latin America

1 Figures

26

40

34

23

58

31

21

48

30

22

20

5 4

22

38

24

21

38

49

41

16

21

40

19

11

32

64

AsiaPacific

20

29

56

North America

China

51

26

59

21

80

11

91

may not sum to 100%, because of rounding.

India, n = 182; in Europe, n = 794; in North America, n = 562; in AsiaPacic, n = 273; in developing markets, n = 213; in China,
n = 97; and in Latin America, n = 162.
3 In India, n = 154; in Europe, n = 644; in North America, n = 508; in AsiaPacic, n = 186; in developing markets, n = 189; in China,
n = 91; and in Latin America, n = 116.

2 In

We also asked about the expected rate of GDP growth in China, and most respondents predict that
the country
will meet or come close to its 2015 growth target of 7 percent. Executives in some regions
Survey
2015
Europe and North
America,
specificallyare
Economic
snapshot,
September
2015 more likely than others to expect modest (and slowing)
Chinese growth
Exhibit
5 of 6 (Exhibit 5). Looking further ahead, to 2018, respondents are less optimistic. Nearly twothirds of all respondents (and 59 percent in China) believe that three years from now, the annual rate
of growth will be 5 percent or less.

Exhibit 5

Executives in North America and Europe are the most likely to expect that
GDP growth in China will slow this year.
% of respondents,1 by office location
Expected rate of GDP growth in China, 2015
<4%

4%5%

6%7%

8%

1
North America,
n = 508

14

34

47
1

Europe,
n = 644

Developing
markets,
n = 189

AsiaPacific,
n = 186
Latin America,
n = 116

33

53

24

64

27

70

22

74
1

1 Respondents

India,
n = 154

China,
n = 91

18

13

76

84

who answered dont know are not shown, so gures may not sum to 100%.

Survey 2015
Economic snapshot, September 2015
Exhibit 6 of 6

Exhibit 6

Executives in China are less concerned than all others about a sharp slowdown there,
both in the next year and the next decade.
% of respondents,1 by office location
Likelihood of sharp slowdown in Chinas economic growth
Extremely likely

Very likely

Somewhat likely

China,
n = 91
Over the next
12 months

Over the next

10 years

11

1 Respondents

Not at all likely

All other regions,

n = 1,797
26

41

29

37

25

13

23

14

37

39

41

36

who answered dont know are not shown, so figures may not sum to 100%.

Compared with their peers, executives in China are less worried about slowing growth. Just one-third say
a sharp slowdown in Chinese growth is very or extremely likely over the next year, and 40 percent say
the same about the next decade (Exhibit 6). Those in China are also more optimistic than others about the
rate of GDP growth: 84 percent say the economy will grow 6 to 7 percent this year. Just 15 percent
compared with 39 percent of all other respondentssay the growth rate will be 5 percent or less.
At the same time, executives in China note concerns at the company level. They are more concerned than
their peers elsewhere that demand for their companies products and services will decrease in the next
six months. And along with executives in Latin America, they are the most likely to expect their companies
profits will decrease.

1 The online survey was in the field from August 31 to September 4, 2015, and garnered responses from 1,888 executives

representing the full range of regions, industries, company sizes, functional specialties, and tenures. To adjust for differences in
response rates, the data are weighted by the contribution of each respondents nation to global GDP.
2 On March 5, 2015, at an annual parliamentary meeting, China Premier Li Keqiang announced a 7-percent target for 2015 GDP
growth in China.
3 Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Panama, Peru, Uruguay, and Venezuela.
4 Economic Conditions Snapshot, June 2012: McKinsey Global Survey results, June 2012, mckinsey.com.
5 Australia, Hong Kong, Japan, New Zealand, the Philippines, Singapore, South Korea, and Taiwan.

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