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Business pessimism eases worldwide in June — survey

Czeriza Valencia (The Philippine Star) - June 27, 2020 - 12:00am

MANILA, Philippines  — Pandemic-related business pessimism among companies worldwide appeared to have eased in June, with most expecting the global economy to emerge from recession in the fourth quarter of the year, said UK-based think tank Oxford Economics.

In a new research paper titled “Global Risk Survey: Business pessimism easing,” the firm said the results of its June 2020 flash survey of risk perceptions showed marked improvements over the responses in May.

Two-thirds of businesses surveyed responded that they now expect the global economy to come out of recession by the last quarter of 2020, compared with around half of the respondents in May.

Oxford Economics said the June flash survey ran from June 17 to 19 and was completed online by 159 businesses which include some of the world’s largest companies. These companies belong to the following sectors: finance; real estate, real estate finance and infrastructure; and industrial manufacturing and materials.

By region, Europe and North America (31 percent and 22 percent, respectively) were the most dominant in the quarterly survey. The rest of the firms identified as being multinational rather than having a primary geographical focus.

“Overall, we found that business pessimism has eased over the past month,” said Oxford Economics.

Businesses, however, remain cautious, with 53 percent of respondents believing that near-term risks to the global economy remain tilted to the downside.

As of June, most businesses (85 percent) still expect to be negatively affected by the pandemic but this was lower compared with 89 percent of respondents in May.

While most businesses still expect a global recession to last for more than two quarters, fears over a lengthy recession have eased in June. Two-thirds of respondents (67 percent) now expect the global recession to last for only three or fewer quarters, up from 56 percent in May.

Overall, businesses worldwide continue to expect a relatively gradual recovery trend. A U-shaped recovery, characterized by a gradual decline and a gradual recovery after recession, is seen by 46 percent of businesses as the most likely as of June.

A large number (24 percent) also continue to expect a W-shaped recovery in which growth initially recovers and then weakens as the pandemic returns.

Pessimism does appear to have eased slightly in June, with more firms expecting a V-shaped recovery at 12 percent, from eight percent in May.

OXFORD ECONOMICS
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