Tag: McKinsey Global Survey on economic conditions

As 2025 draws to a close, a new wave of confidence is sweeping through the global boardroom, signaling a definitive shift from the cautious outlook that defined much of the year.

According to the latest McKinsey Global Survey on economic conditions, surveyed executives are finishing the year with renewed faith in both the macroeconomic environment and their own companies’ performance.

The McKinsey report revealed that while trade policy changes were previously viewed as the primary risk to growth, attention has now turned toward geopolitical instability and conflicts.

Despite these concerns, the report noted that  there  was  a tangible sense of momentum as leaders prioritize customer engagement and technology investments over broader macroeconomic worries.

This optimism, the report maintained  is reflected in profit expectations; although the share of respondents expecting increased demand is at its lowest point since 2020, they remain more than twice as likely to expect improving demand rather than a decrease.

In Africa, the narrative is one of “resilience forged by hard-won gains,” according to African Development Bank Group.

 While the continent’s growth outlook for 2025 was slightly downgraded to 3.9 percent due to seismic shifts in global trade and aid cuts,  the bank  projected  21 African countries would  to grow by more than 5 percent this year.  The report  emphasised a necessary paradigm shift: “If Africa invests in itself, leverages its strengths, and governs its resources wisely, boundless possibilities lie ahead to decouple from external dependence”.

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Its African Economic Outlook 2025 highlighted a staggering potential for domestic resource mobilisation, suggesting that deep reforms could unlock an additional $1.43 trillion annually from fiscal, natural, and human capital. The figure exceeded the $1.3 trillion annual financing gap required to achieve the Sustainable Development Goals by 2030.

The report asserted that making Africa’s capital work better is a “governance and leadership imperative”.

Simultaneously, the World Economic Forum’s Future of Jobs Report 2025 underscored a period of intense labor market transformation.

In Sub-Saharan Africa, it  noted that 64 per cent  of businesses identify an increased focus on labor and social issues as a key trend through 2030, followed closely by the rising cost of living and broadening digital access. However, the report indicated significant barriers remain, with many regional companies citing widespread skills gaps and a shortage of investment capital as primary hurdles to transformation.

The report noted that specialised roles in AI, big data, and cybersecurity are among the fastest-growing skills needed globally, yet the African Development Bank warned that skill mismatches persist due to education systems that have not kept pace with market needs.

In response, organisations, such as AVANA, a Center of Excellence at Africa Business School, are working to bridge these gaps.

During its pivotal 2024-2025 period, AVANA implemented projects focused on value-driven management and digital transformation in agrifood systems, aiming to translate research into “actionable frameworks that support system transformation.”

Business executives across the world are more confident in the global and domestic economy, showing a more optimistic views of the business environment.

The latest results from the McKinsey Global Survey on economic conditions showed that executives shared much brighter assessments of the global economy, but two-thirds cited geopolitical instability and conflict as the top risk to global growth.

For the first time in five years, executives pointed to policy and regulatory changes as a top threat to their companies’ performance; for the previous five quarters, respondents’ most cited risk was weak customer demand.

The survey indicated that executives’ latest views on the global economy and their countries’ economies lean much more positive than they did at the end of last year.

According to the survey, the outlook on domestic conditions in most regions has become more hopeful, despite ongoing shared concerns about geopolitical instability and conflicts.

However, in a year brimming with national elections, respondents increasingly saw transitions of political leadership as a primary hazard to the global economy, particularly in Asia–Pacific, Europe, and North America.

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Furthermore, respondents now view policy and regulatory changes as a top threat to their companies’ performance, and they offer more muted optimism than in December about their companies’ prospects.

Respondents share much brighter assessments of the global economy and conditions in their countries than they did at the end of 2023, and views of the global economy are the most positive they’ve been since March 2022.

“In the December survey, respondents were equally likely to say the global economy had improved and worsened. Today, respondents are twice as likely to report improving rather than deteriorating conditions. Looking ahead to the next six months, respondents are also more optimistic than they were last quarter. Forty-six per cent expect the global economy to improve—nearly double the share expecting worsening conditions—while 37 per cent expected improvement in the previous survey.

“Likewise, respondents offer hopeful views when asked about the most likely near-term scenario for the global economy, suggesting confidence in central banks. They are more likely to expect a soft landing overall—with either slowing or accelerating growth compared with 2023—than a recession The largest share of respondents expect a soft landing, with slowing growth relative to 2023,” McKinsey stated.

The survey content and analysis were developed by Jeffrey Condon, a senior knowledge expert in McKinsey’s Atlanta office; Krzysztof Kwiatkowski, a capabilities and insights expert in the Boston office; and Sven Smit, chair of insights and ecosystems, chair of the McKinsey Global Institute, and a senior partner in the Amsterdam office.

Respondents’ views on their own economies have also become more upbeat. Nearly half of respondents say economic conditions at home are better now than they were six months ago, up from 41 per cent in December, while just 22 per cent say conditions have gotten worse. Respondents in Europe—who offered the most negative assessments of any respondents in September and December—are now nearly twice as likely as in December to say conditions have improved in the past six months, though it is unclear what has prompted that change and whether it is a durable finding.

More than half of respondents expect their economies to improve over the next six months. It’s the first time in two years that a majority of respondents have said that. In most regions, larger shares of respondents express optimism about economic conditions at home now than in December.

Geopolitical instability and conflict continues to be the most cited risk to global growth, selected by two-thirds of respondents for the second quarter in a row. Yet in this first quarterly survey of 2024—a year in which more than 60 countries will hold national elections—transitions of political leadership have jumped from the fifth-most-cited to the second-most-cited threat to the world economy. The share of respondents in Europe reporting political transitions as a top threat is 2.4 times the share in December, while the shares in North America and Asia–Pacific have nearly doubled. There was a smaller uptick in concern about supply chain disruptions, which was cited as a threat by the largest share of respondents since December 2022.

According to the report, looking at risks to growth in respondents’ countries, geopolitical instability and conflict remains the top perceived threat, cited by a larger share than in any quarter since March 2022. Uneasiness about domestic political conflicts and transitions of political leadership, now the second- and third-most-cited risks, have overtaken concerns about inflation, which was the second-most-cited risk in December. Among respondents in North America, transitions of political leadership are cited nearly twice as often as in December). In Greater China, multiple risks now appear to carry equal weight, whereas in December, inflation was the top concern.

As respondents’ concerns about inflation as a domestic threat wane, the survey results suggest that companies are holding off on price increases. For the first time since the survey started asking about companies’ prices in September 2022, less than half of private-sector respondents in the latest survey—45 per cent—said their companies increased the price of their goods or services over the past six months, down from 56 per cent in December.

“For five quarters, respondents’ most cited risk to their companies’ performance in the next 12 months was weak customer demand. Now, they most often point to policy and regulatory changes as a threat. In December 2023, policy and regulatory changes weren’t even one of the top five perceived risks. This increased wariness of policy changes cuts across most regions, though we see the largest increase in Europe.

“Even though weak demand is no longer the most cited risk for companies, optimism over expected demand has tapered since December. Fifty-one per cent of respondents expect an increase in customer demand over the next six months, down from 57 per cent in December. Yet expectations about profits remain upbeat: about six in 10 respondents expect increasing profits in the months ahead, in line with expectations in much of 2023,” the report stated.