Top challenges to global growth, according to a survey, are inflation and geopolitics

Top challenges to global growth, according to a survey, are inflation and geopolitics

In a global poll on economic circumstances conducted by McKinsey in March, respondents identified inflation and geopolitical instability as the two biggest dangers to economic development. The COVID-19 pandemic is no longer seen as a significant macroeconomic danger.

Even respondents in Greater China, who have expressed excessive worries about the economic repercussions of the epidemic, perceive it as a significantly lower danger than it was in the previous quarter.

During March, the level of economic optimism peaked and then decreased. Respondents expressed more optimistic opinions of the world economy early in March than in previous quarters. 40% of respondents claimed that the preceding six months had improved the state of the world economy.

40% of respondents claimed that the preceding six months had improved the state of the world economy. Only 28% predicted that the world’s conditions would worsen in the coming months, while 45% anticipated an improvement.

However, that optimism had diminished by the end of the month. Although still more upbeat than in the previous quarter, respondents were much less optimistic about global conditions and the prospects for the global economy than they had been in early March.

Respondents’ assessment of the global economy had cooled by late March after reflecting their most optimistic views in many quarters. In March, respondents’ excitement for their home economies increased before declining. In India, this shift in attitude was stark: in a study conducted in late March, 46% of respondents believed their homes were improving, down from 66% earlier in the month.

North American and developing-market respondents show a decline in optimism between surveys, and they are currently more pessimistic than they were in December 2022.

Respondents have consistently expressed concerns about global instability when questioned about hazards that extend beyond the boundaries of their nations.

Two-thirds in early March and a comparable percentage in the late March poll named it a danger to the global economy, both rates gradually rising since September 2022.

Comparatively, to the 54–59% who stated the same in the previous four quarters, 72% of respondents to the late March poll indicate that the epidemic has little to no impact on corporate planning and decision-making.

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