When asked for their global economic outlook for 2016, U.S. chief executive officers were among the most pessimistic. During 2015, U.S. CEO confidence declined by a bit more than 9%, compared with a decline of 1.7% for CEOs in the European Union.
Despite the decline, U.S. CEO confidence levels remain the highest overall reading of any region included in the recent Young Presidents’ Organization/CNBC survey. Globally, CEOs registered a 7.16% decline in confidence between the end of 2014 and the end of 2015.
There were three major influences on CEO confidence levels in 2015, and those are expected to continue into 2016. Lower-for-longer crude oil prices have lowered confidence levels around the globe, and the African region posted an economic confidence score of just 51, its lowest ever.
A second cause for the lack of optimism was the slowdown in China’s GDP growth. As China has turned its attention from infrastructure and exports to a more domestically driven economy, global commodity metals prices have collapsed.
Declining growth in the world’s emerging markets was the third major concern, with Brazil registering a decline of more than 20% in its confidence level.
As pessimistic as that all sounds, it is, as the saying goes, relative. Over the five-year period from 2011 through 2015, the confidence reading fell from 61.2 to 59.6, down just 1.6 points. The confidence level among U.S. CEOs is unchanged in the period at 61.3.
Overall, according to the survey team, “CEOs may take a more conservative approach to business management in 2016,” and they also “remain optimistic and expect moderate GDP growth” for the year.
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