Company executives forecast continuing economic gloom but, for the second quarter in a row, the good news is that the percentage of respondents who think the situation is worsening hasn’t increased, according to a McKinsey quarterly survey.
A gloomy economic stasis has taken hold, responses to the survey conducted from 10 March to 16 March—indicate. The percentage of the executives who say economic conditions have gotten worse at the national level hasn’t increased, but fewer than a third expect an upturn this year.
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Executives overall are confident with how their companies are managing the crisis, though 53% expect profit to drop in the first half of 2009, and the number expecting to shed workers has jumped 8 percentage points in six weeks. Companies that executives
describe as well managed are more likely than others to reduce both operating costs and capital spending—and perhaps not weaken operations a great deal, because these companies are also more likely than others to be improving productivity. The survey shows that most companies are not actively seeking more cash. Respondents thought “bad banks”—institutions created to hold bad loans of banks—are a good idea, disagree on whether chief executive officers are paid too much, overwhelmingly said the public trusts business less than it did before the crisis—and laid the blame at the doors of financial firms.
The survey garnered 1,630 responses from executives across a range of regions, industries, and functional specialities.
Graphics by Sandeep Bhatnagar / Mint