Even if there are countries and governments that have managed to dodge the major impact of COVID-19, the global economy is still bleeding. Still, the latest Global Business Barometer (GBB), conducted by The Economist Intelligence Unit and supported by SAS, shows that as of late May executives believe the world is still in the survival phase.
Many organizations managed to live with the new reality calibrating their business operations and the adjustments may become permanent as the virus that caused the pandemic remains incomprehensible.
The barometer reading for the three-month outlook for the global economy rose 11.5 points from -39.2 to -27.7, a marked improvement from the first GBB in April but indicative of a recovery that could remain a long way off. Sentiment in Europe increased the most (from -40.4 to -27.3), followed closely by the Asia-Pacific and North America. Sentiment about the global economy among executives in the Middle East and Africa region, while still up, increased by only 6.6 points, the least among the five regions covered by the barometer.
Sentiment in China falls
The biggest single swing in the barometer from April to May came in China, where the three-month outlook for the economy fell by 21.9 points. At the time of the first GBB in April, China looked to be over the worst of COVID-19 (or at least the worst of the first wave). That has clearly since changed, with the mood souring considerably on widespread downgrades to China forecasts and the Chinese government abandoning its annual GDP target for the first time in decades.
When asked what actions they would like to see governments take in the coming months to get the global economy and businesses back on track, “limit international travel” surged to the No. 1 answer (51%) after ranking toward the bottom in the last GBB survey. This put it ahead of other options such as direct fiscal stimulus to consumers and tax cuts. Now that travel restrictions have been demonstrably effective in many instances against the spread, GBB sees a mix of resignation and adaptation among executives on the issue.
There was an uptick in the percentage of GBB survey respondents answering that the global economic recovery will take “3 to 5 years.” In April, the figure stood at 30.8%. In May it was at 37.2%. All other options more or less held steady.