Mckinsey: COVID-19 remains biggest risk to economic growth

More than a year after the onset of the coronavirus (COVID-19) pandemic, a survey conducted by global management consulting firm, Mckinsey & Company, has found that the pandemic remains the biggest risk to economic growth in most countries.


The firm, which stated this in a report obtained by New Telegraph yesterday, said that although the findings of the survey suggested that there is now greater optimism about the economy and corporate prospects since the COVID-19 crisis began, the, “pandemic still looms largest as a risk to economic growth in respondents’ countries.”


Specifically, it said that the pandemic was cited most often as the biggest risk to growth, followed by unemployment and domestic political conflicts, and is the most common risk in every region but Latin America and India. It noted that as in its previous survey, executives in Latin America and in Europe cited unemployment more often than their peers.


Mckinsey said: “While the global economic outlook has wavered in recent months, respondents are more optimistic now about the world economy’s prospects than they’ve been at any other point during the crisis. Sixty-nine percent believe global economic conditions will improve, up from 56 percent in the previous survey.


“When asked about their countries’ economies, nearly three-quarters of executives      expect improved conditions in the next six months, up from 56 percent in January—the highest share to say so since the pandemic began and since we began asking the question in February 2004.


In every region but Latin America, where executives are still more optimistic than pessimistic, a majority of respondents expect improvements in the months ahead.”


According to the management consulting firm, the survey also found that unemployment concerns seem to be subsiding, compared with the past few months when, “pluralities or outright majorities of respondents predicted an increasing unemployment rate at home.”


“Now, 43 per cent of respondents expect a decline while 38 per cent expect an increase, though there are notable differences by region. A majority of respondents in Europe still anticipate rising unemployment (which was true in the past two surveys), while those in North America are the most likely of their peers to expect a decrease in unemployment: 69 per cent say so, while only per cent in the region predict an increase,” it stated.


In addition, the firm disclosed that the survey indicates that at the company level, positive expectations are also heading north.


As it puts it, “Sixty-three percent of executives believe that demand for their companies’ products and services will increase in the months ahead, versus 39 per cent who said the same one year ago, while 65 per cent expect their companies’ profits will increase—the largest share to say so in three years.


Workforce expectations remain stable, with a plurality of respondents saying their head counts will stay the same as they have throughout the pandemic.


Thirty-seven percent, however, expect their workforce size to increase—the largest share to say so since before the pandemic.


“For respondents’ own companies, weak demand remains the greatest threat to growth, though increasing industry competition has risen in the ranks.


Across sectors, respondents in consumer packaged goods and retail are the most likely among their peers to say so: 41 per cent cite it as a risk to company growth, versus 28 per cent of those in all other industries.”


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