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Economic Conditions Snapshot, June 2009
McKinsey Global Survey Results
 J  e a n a n ç  oi   s M a  t  i  n
Executives have become notably more optimistic about their companies’ and theircountries’ economic prospects since mid-April—but the outlook was so poor then that optimism must be tempered.
Over the past six weeks,
executives have become markedly more optimistic aboutcurrent economic conditions and prospects or their national economies, a newMcKinsey survey shows.
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Expectations started out so gloomy, however, that even now,ewer than a third expect an economic upturn this year, and two-thirds expect theirnations’ GDPs to decrease in 2009.Similarly, at the company level, more executives still expect to shed workers than to hire,but the share expecting to decrease the workorce has allen below hal or the frst timesince January. And a ull third o respondents now expect profts to increase in 2009, up8 percent in six weeks. Furthermore, even though respondents see allout rom the crisisin a variety o fnancial and nonfnancial measures such as employee morale and the paceo innovation, strong majorities expect those eects to be short-lived.
More hopeful executives
The share o executives who say their countries’ current economic conditions are betterthan they were in September 2008 has more than doubled since mid-April, and theproportion who expect conditions to improve by the end o the year now stands at 39percent (Exhibit 1). Nonetheless, only 28 percent expect an economic upturn in 2009,and the share o those expecting their countries’ GDPs to decrease has allen onlyslightly, to 67 percent.
 
Economic Conditions Snapshot:June 2009
McKinsey Global Survey Results:
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The online survey was in the feldrom June 2 to June 8, 2009,and generated responses rom1,404 executives around theworld, representing all industries,regions, and unctional specialties.
 
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Economic Conditions Snapshot, June 2009
McKinsey Global Survey Results
When asked what single indicator they rely on to signal an upturn, most executivesmention GDP, consumer spending or confdence, or employment. Several mention thedegree o government involvement in the economy, saying that less involvement wouldbe a good sign. Remarkably ew mention the perormance o stock or bond markets.One reason or the lack o ocus on markets is likely an easing o executive concernabout market volatility ater two months o gains. Concern about volatility, along witha mix o other trends, has generally eased since late last all (Exhibit 2). That said, thepercentage o respondents who ear a long recession has risen slightly since April, bythree percentage points—by exactly the same amount as the percentage indicating hopeor global economic regeneration. The likeliest overall scenario, executives say, remainsa battered but resilient global economy.
Exhibit 1
A doubling of optimsm
% of respondents
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Figures may not sum to %, because of rounding.
How are current economicconditions in your countrycompared with conditions inearly September ?How do you expect yourcountry’s economy to be inthe rst half of ?
Substantially worseModerately worseThe sameModerately/substantially better
Jun 2009n = 1,40427
43 10 20
Apr 2009n = 1,64333
48 9 9
8
29 24 39
10
35 33 22
 
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Economic Conditions Snapshot, June 2009
McKinsey Global Survey Results
On all these measures, European executives indicate less optimism than executiveselsewhere (Exhibit 3).
Exhibit 2
Improvement across most trends
Expectation on where given condition will be, average score
1234567High market volatility continuesMarket volatility has notably declinedMarkets have stalled: cost of creditremains high, liquidity remains limited,asset prices remain lowMarkets have rebounded:credit and liquidity return,asset prices recoverA prolonged global recessionis creating widespread effectsin the real economyA recession primarily limited todeveloped economies is having littleeffect on the real economyGovernment regulation, activity inthe financial sector has increasedsignificantlyGovernment regulation oractivity in the financial sectorhas increased slightlyMany industries have undergonesignificant restructuring, includingconsolidation and/or newentrantsLittle industry restructuring hastaken placeThere has been strong socialor geopolitical backlash againstthe free-market systemThere has been little socialor geopolitical backlash againstthe free-market systemRisk taking and/or risktrading by companies hasdeclined dramaticallyRisk taking and/or risk trading bycompanies has declined moderatelyor slightly
At end of first halfof 2009 (asked in Mar 2009)At end of first quarterof 2009 (asked in Dec 2008)At end of first halfof 2009 (asked in Jun 2009)
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