US executives are most bullish on economic growth

US finance executives lead in global rankings on economic optimism, according to a new survey from American Express and Institutional Investor’s Thought Leadership Studio.

The 2017 Global Business & Spending Outlook from American Express and Institutional Investor finds that across the globe, expectations for “substantial” economic expansion have hit a 10-year high of 38%, indicating a surge in optimism.

US expectations for substantial economic expansion lead the world by a wide margin (69%, up from 23% last year). Seventy percent of executives worldwide anticipate either “modest” or “substantial” growth this year, up from 64% in 2016.

The results are based on a sampling of 650 senior finance and other corporate executives of firms with annual revenues of US$500m-plus, located in North America, Europe, Latin America, Asia and Australia. They were polled in late November and early December 2016.

With an indication of improving global business prospects, companies’ spending is forecast to increase in the coming year. The number of respondents overall anticipating moderate spending and investment rose to 76%, from 55% last year, while the proportion of respondents anticipating tightly controlled spending and investment dropped, from 26% in 2016 to just 6%.

“After years of embracing a do-more-with-less mantra, many large and global companies are ready to shift into growth mode,” said Brendan Walsh, executive vice president, American Express Global Commercial Payments.

“Companies are loosening their purse strings to take advantage of improved opportunities, while at the same time focusing on top-line growth, on continuing to improve profitability and on ensuring they remain competitive.”

North America now has the most optimistic outlook on economic prospects worldwide, with 67% of US respondents anticipating substantial economic expansion – the highest level for any region since this study began in 2008. Canadian finance executives are nearly as optimistic about their economy, with 93% of respondents expecting either “substantial” or “modest” expansion, up from 63% in 2016. In the US, 95% of respondents anticipate “substantial” or “modest” growth, compared with 73% last year.

However, European expectations for economic expansion have declined year over year, with only 33% of respondents expressing optimism, down from 62% in 2016. The UK, while most positive in the region, experienced the greatest drop in optimism with 33% expecting economic expansion against 75% in 2016. Optimism also eroded in Germany, where 30% of respondents anticipated economic growth (from 57% in 2016), as well as in France (30% vs 47%) and Russia (30% vs 44%)

Uncertainty around Brexit’s knock-on effects and upcoming European elections likely underlie these results.

In Asia/Australia, 84% of respondents anticipate economic expansion over the next year, up from 58% in 2016. Optimism in Japan has rebounded (97% choosing substantial or modest economic expansion, nearly double 50% in 2016). China has also seen a sharp rebound in optimism (87%, up from 58% in 2016), helping to buoy prospects across the region. Australia has seen a rise in optimism as well (83%, up from 65% last year). India has a less positive outlook, where optimism has eroded (77%, down from 86% last year).

In Latin America, 80% of respondents anticipate expansion in 2017 against 73% last year. Optimism in Argentina increased by a substantial margin for the second year in a row (94% vs 73% in 2016). Brazil showed a more modest increase, with 73% of respondents expecting expansion over the next year (from 67% in 2016). The relatively modest improvement is likely a reflection of political uncertainty. Optimism in Mexico eroded slightly, with 73% of respondents anticipating expansion (down from 79%), most likely related to uncertainty regarding trade relationships and agreements.

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