Executives have become markedly more pessimistic about their companies’ prospects over the past month, and their already gloomy views on their countries’ economies have intensified, according to a recent McKinsey survey.1 Just over half expect deflation in the first quarter, and the economic downturn appears to have begun hitting developed markets harder over the month, with much higher proportions of executives in those countries saying conditions have gotten “substantially worse.”
With regard to their companies, nearly 70 percent of respondents say they have already seen their profits fall as a result of global turmoil, and half expect profits to fall in 2009. The share of executives saying their companies are planning to decrease the size of their workforces in the near term has risen from 35 percent to 44 percent in the past month.
Nevertheless, some companies—though fewer than a month ago—are still maintaining stability and even finding opportunity in these markets. Smaller and private companies continue to look nimbler and more stable than larger and public ones. And 13 percent of companies overall are contemplating positive strategic moves (such as introducing new products or services to meet new customer needs) and not contemplating any defensive strategies (such as...