CFO survey: Public mistrust, sanctions may hurt global economy

Jun. 11, 2014 @ 05:04 PM

Public mistrust and severe sanctions against Russia threaten the global business environment, according to a recent survey by Duke University and CFO Magazine.
Other results of the survey, which concluded June 6, include companies stockpiling cash and that, although economic optimism is on the rise in the United States and Asia, it is down sharply in Latin America and Africa.
“Public distrust inhibits the economy from reaching its full potential,” said John Graham, a finance professor at Duke’s Fuqua School of Business and director of the global business outlook survey. “Mistrust can reduce growth and it causes companies to devote time and resources to counteract mistrust’s negative effects.”
The survey has been conducted for 73 consecutive quarters and spans the globe.
Chief financial officers who participated in the survey that have business connections to Russia worry that stepped-up sanctions would hurt business and compel them to consider pulling back from that country.
Problems in Latin America include concerns about work stoppages, especially in Brazil.
“Emerging economies have been grappling with reduced demand and slower growth over the past couple years,” Graham said. “Now on top of weak demand, business leaders are dealing with a restless and, in some cases, combative workforce. This is especially concerning in Brazil as it hosts the World Cup.”
Labor unrest also threatens economic conditions in Africa, the survey states.
Meanwhile, European CFOs think deflation already started, or soon will occur, in the Eurozone and will continue for at least two years.
On a scale of 0 to 100, CFO optimism about the U.S. economy climbed to 61, a high it only reached once before since mid-2007. The nation still trails Asia, which has an optimism index of 65, according to the survey.
The index is lowest in Africa at 45.