Global Executives See a Recovery

Top executives and bankers across the globe have a (relatively) rosy view of how long it will take for the economic crisis to turn around. Two separate surveys released today registered upbeat assessments, with most executives predicting a return to pre-crisis levels by the end of 2011 -- at the latest.

Even as executives waxed optimistic, consumers -- whose pessimism reached an all-time low in February -- remain gloomy. Their confidence was flattened by the job-loss steamroller, according to the Conference Board's monthly Consumer Confidence Index.

In contrast, 84 percent of executives responding to a new survey by Arthur D. Little, the management consulting company, said they expected full recovery no later than 2011. Almost half, or 48 percent, said they believed that business activity would be restored completely even sooner -- by the end of next year.

"This is a rather positive outlook given the depth of the downturn so far," the company noted when releasing the responses from nearly 400 executives on various continents.

Bankers were relatively chirpy too, according to a global survey [pdf] by The Banker magazine in England. It found slightly more than 25 percent expected their institutions to improve or recover in the second quarter of this year. About the same percentage of the nearly 100 senior bankers queried also expected overall business to be better this year than last.

Despite the crisis, bankers said they were planning to invest in information technology with the aim of introducing new retail savings and cash management products. At the same time, more than 50 percent said government should lower taxes to help the banking sector.

However, bankers didn't offer much hope for mortgage lending this year, with fewer than 5 percent reporting that such lending was an active business area. Consumer finance and personal loans were more active -- along with corporate lending. But only 3.5 percent of the bankers surveyed believed their current capital level was too low. In fact, more than 48 percent said their capital level was a bit higher than regulatory requirements.

In contrast to the bankers who seemed relatively content with the status quo, about two-thirds of executives in the Arthur D. Little survey conceded that the economic crisis was not a cyclical downturn but a fundamental questioning of the way businesses are run.

Nearly 60 percent were rethinking their company's medium-term business vision and shoring up their company's risk management capabilities as they brace for a bigger government role and the demise of weaker competitors.

by Elizabeth Olson