More Recessionary Sentiment from World Markets


In a follow up to a previously released survey of U.S.-based SMEs (which we covered on these pages), J.P. Morgan Chase added additional survey results from business leaders of midsized companies in Europe (Germany, France, UK), India, and Australia.   

There are both similarities and differences in the outlooks among these various markets. If one looks at German sentiment, it would be more closely aligned with results from the U.S. survey. Indeed, 59% of German respondents expect a recession in 2023, while 24% and 28%, respectively, are pessimistic about global and domestic economic performance. Interestingly, as was the case with U.S. SME responses, a majority of business leaders still expect both higher revenue and profits in 2023, reflective perhaps of a certain resiliency grown out of dealing with circumstances around the pandemic.  

As one might expect given energy policies and the outbreak of the Russia-Ukraine war, energy costs are the largest concern in Germany, with 77% citing those as the main cost driver, while 24% see it as the main existential threat to their business. Looking at responses from the UK, although global economic pessimism remains, there’s more positive expectation that their own businesses will grow in 2023. As with Germany, inflationary pressures are the main concern, driven mostly by energy costs and rising interest rates.  

Responses from French midsized business leaders were more optimistic, though more than half (53%) said they see a recession coming, for which they expect to adapt, as in the other markets. Inflation is also top-of-mind, driven by increased cost of raw materials and energy. Among other things, the French are changing their manufacturing geographies to combat costs. 

Jumping over to India, survey results indicate a much more confident group of business leaders, with 91% expecting greater revenues and 84% higher profits, despite the concerns over costs and competition. 68% and 63%, respectively, also see domestic and global economies in a positive light.  While inflation is a concern, business leaders in the region are taking a wide range of actions, including cost cutting and prioritizing manufacturing, while attempting to improve working environments for employees as a high priority. Respondents also indicated that their supply chain issues have improved over the past 12 months, driven by initiatives around broadening suppliers and shifting production closer to key markets.  

Although a tick down in optimism from their counterparts in India, Australia’s midsized company business leaders are a tick above Europe, with 77% and 74% seeing rising revenue and profits, respectively, and optimism with domestic and global economies on par with India. In addition, only 46% see a 2023 recession, which remains a high recessionary expectation but lower than in other markets.  

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.


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