Inflation fears among executives around the world have decreased sharply in the past six months, according to the latest McKinsey Global Survey on economic conditions.
Despite the ongoing financial turmoil and a notable lack of confidence in national economies, respondents indicate that many companies have some flexibility to cope: most of those seeking external funding have so far been able to find it, respondents who predict higher inflation are also likely to report that their companies will be able to raise prices, and a majority of all executives expect the productivity of their companies to increase.
However, almost 30 percent of respondents now expect their companies to shrink the size of their workforce in the next six months, up from 18 percent a year ago. (click on the exhibit). More than 60 percent of the respondents report that their companies have acted to become more energy efficient. Among the most widely used moves are two that can be made very quickly—using less energy to heat or cool corporate offices and reining in business travel.
A year ago, the executives’ fears about economies at the national level rose appreciably. Today, they worry still more: 78 percent say that economic conditions in their countries are worse than they were half a year ago (See exhibit), compared with 64 percent in June.
Source: Economic and hiring outlook, third quarter 2008: A McKinsey Global Survey
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