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Global Executives Expect Strong Economic Growth For India
And China, Less Optimistic About Japan, Europe And U.S.: RBC
Capital Markets Global Survey
NEW YORK, LONDON, TORONTO, February 7, 2011 — India
and China have the best prospects for economic growth over
the next 12 months, while Japan and Europe have a more negative
outlook, according to 461 finance and business leaders from
around the world responding to the latest RBC Capital Markets
survey.
Respondents are also bearish about the United States, with
nearly two-thirds (65 per cent) expecting the U.S. economy
to grow at a slower rate in the coming year than the previous
decade's annualized rate of 2.7 per cent. Specific to Canadian
respondents, 40 per cent said that Canada's growth over the
next year would exceed its average growth over the past decade,
while 33 per cent said growth would slow. The rest said Canada's
growth rate would remain unchanged.
The third semi-annual RBC Capital Markets Global Survey,
commissioned by RBC Capital Markets and conducted by the Economist
Intelligence Unit (EIU), polled executives on their outlook
for the global economy.
According to the survey, 77 per cent of respondents believe
that India's prospects for economic growth over the coming
year were better than they had been the previous year, and
76 per cent believe that China's prospects are better. Africa
and Russia, with 50 per cent expecting better prospects, also
stood out. Only one-in-four executives polled (25 per cent)
believe that Japan's prospects will be better in the next
year compared to last year.
When asked which regions will face worse economic prospects
over the coming 12 months, 32 per cent of the executives surveyed
cite Europe, while 28 per cent identify North America and
28 per cent believe Japan will face slower growth.
Concerns over sovereign debt and a desire for yield appear
to be pushing investors into emerging markets. Almost three-quarters
of survey respondents (73 per cent) expect valuations to be
higher in the major Asian equity markets over the next 12
months, with the flow of funds intensifying global imbalances.
Two-thirds of executives polled also expect the price of oil
and the value of the Chinese renminbi to rise over the next
year, while the euro, the dollar and U.S. treasuries are expected
to weaken.
"In 2010, we saw emerging markets drive better-than-expected
global growth, and there are clear expectations for that trajectory
to continue," said Marc Harris, co-head, Global Research,
RBC Capital Markets. "We are likely to see not only a
continued split between developing and developed nations,
but also splits within developed regions, such as the U.S.
and Europe, where the recovering U.S. economy and sovereign
debt crisis in the European Union are driving the implementation
of different policies."
The survey highlighted changing views from the same survey
six months earlier - namely, respondents are more discouraged
about North America's economy, yet more encouraged by the
rest of the regional economies around the world. When asked
in May 2010 about prospects for economic growth over the next
year, 60 per cent of respondents said prospects were "better"
for North America. However, by January 2011, that number fell
to 48 per cent. At the same time, expectations improved for
Africa: in May, 40 per cent saw prospects improving there,
but by January, that number increased to 50 per cent. Expectations
for improved economic growth in the Middle East also increased
from 41 per cent in May to 48 per cent in January. Although
Europe trailed in expectations in January with 36 per cent,
this still represents a marked improvement from the 27 per
cent of respondents who expected better prospects for the
continent in May. Similarly, expectations for positive performance
by the major European equity markets rose to 44 per cent,
from 38 per cent in May.
The survey also revealed how the landscape is changing for
global currencies. Though four-in-five of executives polled
(80 per cent) said they expect the U.S dollar to be the dominant
global currency over the next three years, the exact same
share as the survey completed in May 2010, only 53 per cent
believe the dollar will be dominant in five years, compared
to 57 per cent in the spring survey. While only four per cent
of executives believe the Chinese renminbi will be the dominant
global currency in three years, 13 per cent believe it will
be in five years. Additionally, a clear majority of executives
(73 per cent) believe there is a possibility that oil will
be priced in a currency other than dollars over the next three
years.
"While most respondents think that conditions will improve
in almost every major region of the world, they also believe
that the recovery will take place at different speeds in different
places," said Richard E. Talbot, co-head, Global Research,
RBC Capital Markets. "The timing of recovery is uncertain
and investors will have to proceed cautiously, carefully evaluating
each market's prospects."
About the survey
RBC Capital Markets commissioned the Economist Intelligence
Unit to survey 461 senior executives from around the globe
(North America [38 per cent], Western Europe [38 per cent],
Asia Pacific [14 per cent] and Rest of the World [nine per
cent]), including both clients and non-clients of the firm,
on their outlook for the future of capital markets. The survey
was completed in January 2011. The respondents included 211
senior executives from commercial and investment banks, hedge
funds, asset managers, pension funds, sovereign wealth funds,
institutional investors and private equity firms and 250 executives
from non-financial companies active in the global capital
markets.
About RBC Capital Markets
RBC Capital Markets is the corporate and investment banking
arm of RBC and is consistently ranked among the top 15 investment
banks globally. With over 6,000 employees, RBC Capital Markets
is active globally in fixed income, foreign exchange, infrastructure
finance, ECM, metals, mining and energy. Working with clients
through operations in Asia and Australasia, the UK and Europe
and in every major North American city, RBC Capital Markets
provides products and services from 75 offices in 15 countries.
For more information, please visit www.rbccm.com.
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Contacts:
Europe and Asia: RBC: Louisa Fairman - 44 (0)20 7029
7821
Greentarget: Dafina Grapci-Penney-- 44 (0)20 7680 5052
United States: RBC: Kait Conetta - (212) 428-6409
Sanam Alaghband - (212) 618-5589
Canada: RBC: Gillian McArdle - (416) 974-5506
Note to Editors:
For a copy of the research paper related to the survey, please
follow the link below: http://www.rbccm.com/about/file-552024.pdf
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