For the first time in six years, a majority of respondents to McKinsey’s latest survey on economic conditions say their home economies are on the right track. Moreover, nearly as many respondents expect their economies to continue improving in the months ahead. The buoyancy is especially pronounced in developed economies, where respondents’ current views on domestic conditions surpass by far what, earlier this year, they expected would be the case now. Their views on the world economy also remain more positive than negative. But in respondents’ estimation, geopolitical instability and asset bubbles have become more pressing risks to near-term global growth.
Seventy-two percent identify geopolitical instability as a risk to growth, the largest share to say so in nearly two years, and those in Europe are the most likely across regions to cite it. Changes in trade policy are cited second most often—although far less often than geopolitical instability—and selected most frequently in North America.
As for the long term, geopolitical instability remains top of mind as a risk to the global economy—carrying associated risks at the company level. In this survey, we asked for the first time about the effects of long-term trends and global forces on respondents’ companies. It is perhaps not surprising that more than half of respondents believe the cumulative effects of technological innovation will have the greatest effect on their business over the next ten years. But they also place policy decisions and geopolitical and digital risks among the top-three trends.
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