The Global Economy in 2016

Businesses resilient in face of growth challenges

Economic conditions began to deteriorate in the second half of 2015 leading the IMF to lower its estimates for global growth from 3.8% to 3.6%. The slowdown of the Chinese economy has contributed to stock market volatility and falling commodity prices. Despite these economic uncertainties, global business optimism stands at net 36% versus 35% one year ago. The Fed’s interest rate rise and tightening stance on monetary policy, hit US business optimism on concerns over exports. 2016 is shaping up to be an interesting year given recent stock market and oil price volatitlity. Grant Thornton’s International Business Review (IBR) will provide quarterly insight into business sentiment in these turbulent times.

The IBR draws on more than 10,000 interviews with business leaders and international economic forecast data, this latest report explores the growth drivers and constraints facing dynamic businesses over the next 12 months including economic uncertainty, export growth, and business propensity to reinvest among other indicators.

• Net 36% of businesses globally are optimistic about their local economy up slightly from this time last year.
• Businesses worldwide are reporting low export expectations and The Federal Reserve interest rate hike hurt US business export expectations especially hard in the fourth quarter.
• Worldwide expectation of an increase in infrastructure and R&D investment has fallen this year compared to last, with emerging market sentiment weighing on forecasts.
• Economic uncertainty is set to be the biggest concern for global business in 2016, with red tape and a lack of skilled workers also weighing on the minds of leaders.
• Global employment expectation for the coming 12 months has remained broadly stable over the past year.