Business Sentiment Rises… A Little

Economic recoveries from crises such as the covid-19 pandemic come in many shapes. The hope everywhere is always that they will be V-shaped, but Us are the next best thing. Volatile Ws and the dreaded L are the worst-case scenarios. The latest Global Business Barometer, based on a survey and analysis conducted by The Economist Intelligence Unit and supported by SAS, shows that as of late June the possibility of U-shaped recovery remains possible as business sentiment rises.

The world is in a precarious spot, but there are some hopeful signs. And some expectation that Asia will lead it to recovery.

Ticking closer to positive: The overall barometer reading for the global economy reached -16.8, the closest it has been to positive territory yet. Respondents in Latin America and the Asia Pacific led the way, with +18.5 and +4.0 improvements respectively. Sentiment about the global and regional economies in North America barely budged from the previous barometer, rising by +1.5 and +0.2 points, making it the most pessimistic on both accounts.

China, the first economy to turn positive: The three-month outlook for the Chinese economy among China-based executives tipped into “somewhat better” in June, though only just at +2.0. This still makes it the first economy to do since the GBB began in April. The change in sentiment is in stark contrast to the last GBB when the outlook there soured by -21.9, by far the most among the twelve main economies surveyed. 

The road, less traveled:. Only 8.1% of respondents to the June GBB survey “strongly agree” that their country is ready to open and only 6.7% “strongly agree” that their company is ready to return to operating as it had done before the pandemic. Those figures are chilling whether you read them as recognition of the scale and scope of the problem or an indictment of global and country-level responses to covid-19 (or some combination of the two). For them to improve will require more leaders and policymakers around the world to demonstrate to everyone that they can be more effective in containing the virus.

About the research

The Global Business Barometer gauges sentiment towards current events and financial market uncertainty and explores how businesses are coping today and planning for the future.