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Business News/ Opinion / Rising profits
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Rising profits

A new study by McKinsey Global Institute estimates that operating profits after tax of the largest companies grew from $2 trillion to $7.2 trillion in 2013

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Global corporate profits have soared since 1980.

A new study by McKinsey Global Institute (MGI) estimates that operating profits after tax of the largest companies grew from $2 trillion to $7.2 trillion in 2013.

The reasons: corporate taxes were slashed across the world, interest rates collapsed and labour costs stagnated after the entry of millions of Chinese and Indian workers into the global economy.

MGI says large companies from emerging markets are driving global revenue growth while profit rates are higher in developed economies. The latter have more companies that create value from intangibles like brands or technology while emerging markets still have companies that make intensive use of their physical assets.

The rise of emerging market corporate giants is one reason MGI expects profits to fall as a proportion of the global economy in the coming years.

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Published: 10 Sep 2015, 12:13 AM IST
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