MSI Global Feelgood Index Reveals Faltering Business Confidence and Shows Economic Crisis is Far from Over

Research into business confidence worldwide from the leading international association of professional services firms MSI Global Alliance, shows that the developed economies’ financial woes continue to cast a shadow over the rest of the world as it attempts to emerge from the financial crisis

Research into business confidence worldwide from the leading international association of professional services firms MSI Global Alliance, shows that the developed economies’ financial woes continue to cast a shadow over the rest of the world as it attempts to emerge from the financial crisis. 

The MSI Global Feelgood Index, which uses weighted averages of seven key business performance indicators, shows a slight fall in global confidence from +0.16 to +0.06, pointing to the continued uncertainty facing the world’s economy.   

“It is becoming increasingly clear that the global crisis is far from over and there remain considerable threats to recovery - a ‘Lost Decade’ is becoming a reality for many countries and regions,” warned Joe Nellis, Professor of International Management Economics at Cranfield School of Management. 

Nellis adds: “The global economy has failed to capitalise on the improvement in market sentiment that began to materialise in early 2012.” 

Western Europe

Despite businesses in Western Europe reporting slightly improved levels of confidence in the last quarter (rising from -0.06 to +0.02), Professor Nellis argues that many quarters of negative sentiment have simply lead to a growing acceptance of the tough conditions that lie ahead:

“Tensions continue to mount in the Eurozone area as some countries (particularly Greece) struggle to get to grips with their government debt crises. Double-dip recessions are now looming across the zone.” Outside of the Eurozone, the UK now finds itself back in recession with the level of GDP still well below that reported in 2007 at the start of the Global Financial Crisis. 

North America

Confidence in North America also fell back (+0.24 to +0.04), with the U.S. economy unable to bounce back.

Nellis comments: “The slowdown in economic growth in the advanced economies has, not surprisingly, had negative consequences for many emerging markets, although growth in these countries is still strong compared to many other parts of the world.”

Rest of the World

The biggest fall occurred in the Indian region – a swing from +0.23 in the previous quarter to -0.29 in the current quarter. Other significant but smaller falls were reported in Southern Africa (+0.16 to -0.11), Latin America (+0.18 to -0.03) and Eastern Europe (+0.18 to +0.11). In contrast, confidence in the Australia and New Zealand region rose encouragingly in the last quarter from -0.01 to +0.21. There has been little change in confidence levels in Eastern Asia and across the Middle East & North Africa region.

Nellis concludes: “Global GDP growth could turn out to be as low as 2.5 per cent for the year as a whole. A return to trend growth may be delayed until 2015 and will be critically dependent upon events in the Eurozone as well as developments in the USA after the Presidential election.”

Note to Editors

Each quarter, the MSI Global Feelgood Index surveys business owners and managers in over 100 countries on their levels of optimism regarding seven key areas of business: sales pipeline, profit margins, cash flow, spending on investment capital, staff numbers, spending on marketing and advertising, and spending on staff training and welfare.

From the period 9 July – 21 August 2012, participants were asked to state their level of optimism or pessimism for each of the seven key areas of business. The responses were then collated and weighted to reflect the size of the different economies in the responding countries, before being analysed by Joe Nellis, Professor of International Management Economics at Cranfield School of Management, a leading international business school based in the UK.

The full research report with global and regional breakdowns and additional comments from Professor Joe Nellis are available on our website at www.msiglobal.org  or can be requested by email from MSI’s marketing team  (marketing@msiglobal.org).

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