Somber Thoughts at Davos

Posted by: Diane Brady on January 28, 2009

One hallmark of the World Economic Forum is the release of annual surveys that point to trends in global business. Not surprisingly, this year’s crop is steeped in pessimism.

On the first day of the gathering, a range of global surveys have already pointed to the dire mindset of world leaders. PR giant Edelman this morning released its 10th annual “Trust Barometer”—a survey of roughly 4,500 opinion leaders worldwide—showing American leaders’ trust in U.S. business has dropped from 58% last year to 38%, the lowest level since the survey began. The two industries that have fallen the most: banking and automotive. While Europeans also reported a lower level of trust, Chinese and Brazilian respondents had increased faith in their businesses.

One reason for growing confidence, a Chinese participant suggested, is that Beijing’s attention to such crises as last year’s tainted formula scandal indicates that a higher level of accountability is being demanded from the private sector. But one Asian attendee later complained that the Chinese government’s efforts to prop up state-owned enterprises is “sucking the life” out of private-sector companies. And a senior U.K. executive who does extensive business in China said that his confidence about the business picture has plummeted. In his view, Western policy-makers continue to over-estimate China’s level of growth over the next 12 to 18 months.

Meanwhile, a survey from PricewaterhouseCoopers found that only 21% of 1,124 chief executives in 50 nations said they are “very confident” about prospects for revenue growth in 2009, down from half last year. The Global CEO Survey also found that leaders see the bad times continuing through the end of 2011. Only a third of those surveyed expect to see any revenue growth over the next three years.

One ray of light, if you happen to live outside a wealthy Western nation, is a study from Boston Consulting Group that identifies 100 “Global Challengers” to established multinationals. BCG characterizes the list as “a wake-up call for the CEOs of today’s corporate giants.” China dominates the list with 36 entrants, from Lenovo Group to lesser-known players such as Dalian Machine Tool Group. India is next, with 20 companies, with Brazil, Mexico and Russia also boasting several players on the list.

Ernst & Young, meanwhile, has released a white paper examining the role that women can play in economic growth. The greater the wage gap, studies have found, the further behind a country is likely to be in its development. (Take note, Yemen) “The vast economic potential of women as an economic force has yet to be realized,” the study’s authors assert. Closing the wage gap, E&Y asserts, will spur faster economic growth. At a time when companies are butting back on staff and salaries, that could turn out to be another goal delayed.

 

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