Corporate leaders may have tempered their earlier enthusiasm, but they remain upbeat, especially when it comes to hiring, IT spending and the opportunities offered by China and India, according to the second McKinsey Global Survey of Business Executives.

Executives embracing from a wide range of industries and regions remain broadly positive about global economy, finds the latest McKinsey Quarterly survey.

Optimism among executives has fallen slightly since the start of the year, but many plan to step up hiring as well as spending on information technology.

The most vigorously upbeat sentiment comes from a rapidly expanding China, which is confident that it will continue to attract massive foreign direct investment, and from India, where executives express strong confidence in the new government's ability to promote economic liberalization.

Nonetheless executives have curbed their earlier enthusiasm about their own economies and industries during a period which has witnessed oil price rises and fears of increasing interest rates.

Overall confidence has declined by 6 per cent since the Quarterly's first survey in January, with the most dramatic decrease taking place in developing markets.

And in a sign that competition remains intense, many executives are also feeling ongoing pressure on prices. Although the promise of India and China continues to dazzle, not all business leaders believe that those countries can sustain their economic reforms.

The survey's regional data provide some of the most intriguing insights into business executives' thinking. In January, for example, those in emerging markets were the survey's most optimistic participants, but their confidence has fallen three times as far as that of their counterparts elsewhere since then -- to a level below the global average. Although the confidence of executives in India and China declined, it remains so high in these two prime destinations for outsourcing and foreign investment as to buoy sentiment in developing countries as a whole.

Short term concerns are greatest among executives in the developed Asia-Pacific economies -- Australia, Hong Kong, Japan, New Zealand, Singapore, South Korea, and Taiwan.

Only 48 per cent of the region's executives expect conditions in either their economies or their industries to improve in the next six months. In contrast, European executives are much more enthusiastic about the prospects for their industries --no matter which one they work in -- than for their national economies: only 51 per cent of them expect even a moderate improvement in the latter, but 62 per cent feel confident about the former.

Information technology appears to be a particularly bright spot everywhere, with investment apparently on the rise.

Half of all chief information officers (CIOs) and chief technology officers (CTOs) who responded to the survey and nearly 40 per cent of all other executives indicate that their companies are planning to increase IT spending over the next six months.

Indeed, nearly one-third of both groups of respondents say that their companies intend to increase technology spending by 11 to 25 per cent.

But executives do not see much opportunity to raise prices, despite these encouraging signs. Around the world, most of the respondents say their companies do not plan any price change, and 9 per cent actually report plans to cut prices.

But the survey offers hope for job seekers. After years of declining employment, 43 per cent of respondents say their companies will start recruiting.

Small businesses are far more confident about adding to their payrolls than their larger counterparts. While Chinese and Indian companies plan to do much of the hiring, nearly half of the North American executives say that their companies intend to take on additional employees -- 11 to 25 per cent more, according to 19 per cent of them.

(China Daily July 16, 2004)