Markit Global Business Outlook Surveys were started during the Global Financial Crisis in 2009 and involve input from more than 6000 companies from all over the world. As one would expect, the surveys highlight regional differences which reflect the strength (or otherwise) of the recovery locally, but the most recent survey, taken as a whole, indicates that business confidence is falling.
Whilst 28% of firms which responded to the most recent survey expect business activity to increase in 2015 (a good thing), that number is down from 39% when the survey last reported in June. The figure is the lowest level of positive business sentiment since the survey began, but then it only records the weak up-swing in business confidence following on from the darkest days of the Global Financial Crisis, of course. Equally, the current hiring and investment plans of the companies surveyed are the weakest in the history of the survey, reflecting the effects of the current level of weak global demand.
Factors which have been identified as reducing business confidence included geo-political conflicts, notably in the Middle-east and Ukraine, but also the likelihood that leading central banks may increase interest rates in the course of 2015 is considered as a business headwind. Worries about very low Eurozone inflation turning to deflation and sparking a deeper downturn in the economic fortunes of the bloc is also acting as a drag on global business confidence. Similarly, the reversal in fortunes of the BRICS economies (Brazil, Russia, India, China and South Africa) is emblematic of the economic opportunities of emerging economies – in the absence of significant global demand, these economies are stymied. The effect of sanctions on Russia, designed to persuade it to disengage from civil troubles in the Ukraine, are having an effect on its economy and those of its trading partners (for instance, Germany). The Russian currency, the Rouble, has fallen from 44.54 to 55.92 to the Euro over the course of the past 12 months. It is also being hurt by the current weakness of crude oil prices additionally.