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Renewed Opportunities for Growth

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The pace of global growth is accelerating, led by North America and Asia

Download the 2017 Global Business & Spending OutlookThe 2017 Global Business & Spending Outlook reveals brightening growth prospects in many parts of the world. Overall expectations for “modest” or “substantial” economic expansion among large companies are on the rise: 70% of all survey respondents predict economic expansion in the country where their position is based, compared with 64% last year. Furthermore, the percentage of respondents anticipating “substantial” (as opposed to “modest”) economic expansion leapt upward this year to 10-year highs. (See Figure 1.) Based on the proportion of respondents anticipating substantial expansion—this study’s strongest statement of a bright economic future—economic optimism around the world is at its highest level this year since the inception of this 10-year annual study.

In the immediate aftermath of the 2008 financial crisis, emerging markets in Latin America and in Asia/Australia led the world’s growth expectations; expectations in North America and in Europe generally lagged behind. In last year’s study, however, slowing growth in China and concern over China’s economic transition (i.e., China’s ongoing shift from an economy reliant on exporting man­ufactured goods to a services-based economy fueled by domestic consumption) led to a dip in expectations in Asia/Australia.

This year, survey results show a dramatic uptick in optimism in North America, where expectations for economic expansion now lead the world by a wide margin. This year’s results also reflect a rebound of sentiment in Asia/Australia, supported by strong growth in China’s manufacturing sector in the second half of the year (fueled, in turn, by a strong property market and government infrastructure spending), as well as positive signals tied to regulatory and financial reforms in Japan.

Country-level results show an exceptionally robust outlook in both the U.S. and Canada and across most of Asia (with the exception of India, where respondents are digesting the potential impact of recent changes in currency policy). In Canada, expectations have been buoyed by a rebound in the country’s energy and mining sectors. Meanwhile, the U.S. economy has continued to expand at a steady pace, supported by a robust jobs market and rising housing prices.

By contrast, expectations for growth in Europe appear to have eroded substantially among large companies since last year, despite the emergence of a range of positive economic signals in the region, including solid business growth and signs of rising prices (easing fears of deflation). The impact of the Brexit vote is weighing particularly heavily in the U.K.: the percentage of respon­dents in the U.K. anticipating economic expansion in 2017 stands at only 33%—down 42 percentage points from last year. European respondents may also be factoring in uncertainty tied to upcoming elections in Germany, France, and the Netherlands, which have the potential to shift the economic- and fiscal-policy status quo. It is important to note, however, that survey results also indicate that company spending and investment in Europe are poised to increase in 2017—a practical recognition, perhaps, of Europe’s strengthening economic fundamentals.

In Latin America, the outlook is relatively flat year-on-year, as the region continues to feel the effects of falling oil prices, uncertainty tied to international trade agreements, and the aftermath of major political and economic crises in Brazil and Venezuela. The outlook in Argentina is notably more optimistic than in other Latin American countries, buoyed by the recent resolution of the country’s sovereign debt crisis.

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