Executives around the world are seeing their domestic economies improving; however, they also say local political conflicts are considered threats to growth, according to a recent survey by McKinsey & Co.
Overall, 38 percent of respondents find politics as a threat to growth. The survey finds this is particularly the case among U.S. respondents as negotiations failed to prevent the automatic government-spending cuts that went through the week before respondents participated in the survey. Other growth risks are low consumer demand at 42 percent, insufficient government-policy support at 37 percent, lack of access to credit at 27 percent and inflation at 20 percent.
As of March, 38 percent of respondents say economic conditions are better than they were six months ago, up from 30 percent in December 2012. Among U.S. respondents, 47 percent say economic conditions have improved over the last six months, marking a slight uptick from 46 percent in December 2012. Eurozone respondents are the least optimistic as only 24 percent of respondents report that the economy is better than it was six months ago, though this is still a jump from 15 percent in December 2012.
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They survey also finds that some global concerns about the eurozone have subsided. In fact, fewer respondents both inside and outside of the area agree it's somewhat likely that countries will leave the eurozone in the next year or that the euro will end as the solo European currency. While eurozone respondents are less worried than others that either of these economic scenarios will happen, they are less likely to anticipate a higher inflation rate from the two earlier surveys.
Additionally, eurozone respondents are especially concerned about the high unemployment rate as more than half expects unemployment to grow as opposed to approximately one-third of all respondents. More eurozone respondents have voiced their worries that low demand could potentially stall growth in the next year.
Instability in the Middle East and North Africa is cited as the most likely potential shock to the global economy in the next 10 years at 63 percent. Among other potential shocks in the next decade are volatile oil prices at 61 percent and instability in Asia at 30 percent. Only 12 percent of respondents believe instability in Asia could potentially shock the global economy in the next year.
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