Trump 2020? Firms haven’t felt this gloomy since the financial crisis
Global businesses were at their gloomiest about business activity and profits since the financial crisis in June, a new survey has shown.
Read more: China growth slows to 27-year low
Bosses were increasingly anxious about US trade tensions with China, Mexico and the European Union, as well as the possible reelection of President Donald Trump in 2020 and Brexit.
The net balance of global firms predicting output to rise over the coming year compared to those expecting a fall dropped from 24 in February to 18 in June, a survey by data firm IHS Markit revealed, its lowest score since 2009.
Expectations of profit growth also fell to a post-crisis low with a net balance of seven in June compared to 15 in February.
This glum outlook has caused firms to ease their hiring and business investment intentions, IHS Markit said.
Chris Williamson, chief business economist at IHS Markit, said: “Escalating trade tensions have fuelled the downturn in optimism, exacerbating wider worries about slowing economic growth in key markets.”
The pullback in hiring and investment “adds to the risk of the downturn becoming more entrenched in coming months, absent renewed policy stimulus measures,” he said.
The US saw the biggest slide in business optimism of all countries apart from Brazil in June, the survey showed.
Firms from the US blame tariffs, the 2020 election, high costs and skills shortages for their pessimistic outlook, IHS Markit said.
Business optimism in China also darkened to its gloomiest since 2009, according to the survey.
“US trade wars remain the single-most commonly cited threat to future growth” by Chinese firms, IHS Markit said.
Read more: Donald Trump takes credit for China slowdown
Williamson said the weak readings indicated “how trade war tensions are hurting both economies”.