YPO, the premier chief executive leadership organization in the world, reported today that the YPO Global Pulse Confidence Index for Latin America, which tracks economic confidence levels among chief executives on a quarterly basis, increased 2.8 points to a firmly-optimistic score of 62.0, its highest level since April 2013.
The rise in confidence continued a two-year upward trend, which has seen confidence recover from 49.6 in 2015 and is now in optimistic territory above the 60.0 mark. This quarter’s improvement was largely driven by a strong surge in confidence in Brazil, which soared 8.0 points to 65.6, its highest level since July 2011. Confidence also improved in Central and South America, following stabilizing commodity prices and an influx of foreign investment.
But, while the overall trend across Latin America was one of improved confidence, not all countries reported an upturn in sentiment. Notably, Mexico experienced a sharp drop in confidence from 9.4 points to 58.2, its lowest level in a year, as trade negotiations continue to concern business leaders.
“Confidence levels are fluctuating across Latin America and there is clearly still some concern about the stability of a number of economies within the region. However, the general feeling is that conditions are set to improve as we move into 2018. There is ample opportunity for growth and expansion in the short term, which business leaders will be looking to explore,” said YPO member Ines Temple, President of Lee Hecht Harrison. “Chief executives will be hoping that socio-political unrest in other regions of the world do not result in a slowdown in the global economy.”
Key findings in Latin America
Economic climate set to improve
Business leaders were markedly more positive about the direction of the economy in the short term than in the previous quarter. Almost two-thirds (64%) of respondents believed that economic conditions will improve over the next six months, 22% expected the environment to remain unchanged, and 14% predicted conditions will worsen.
Latin American business leaders positive
Looking forward 12 months, respondents were bullish about the prospects for their own organizations, which was reflected in the three key indicators in the study, namely sales, employment and fixed investment. Sales confidence jumped 3.0 points to 69.4, with more than three-quarters (76%) of respondents predicting increased revenues and only 3% expecting a reduction in turnover.
When it came to hiring intentions, confidence edged up 1.3 points to 56.5, with over a third (36%) of respondents expecting to increase headcount, compared to only 4% who predicted cuts in staff numbers, a marked improvement from 11% in the previous quarter. Fixed investment confidence remained relatively stable at 59.8, with 53% of respondents predicting investment spending to remain the same, while 42% expect to increase spend.
Key findings in Brazil
Business leaders in Brazil reported a much more positive outlook when it came to their own organizations’ prospects over the next 12 months. Sales confidence leapt 8.9 points to 71.1, with 80% of respondents expecting to increase revenues, versus only 2% who predicted that turnover would fall, a significant improvement on the previous quarter, when only 54% believed sales would increase and 8% expected revenues to decline. Reflecting improved unemployment figures, hiring confidence jumped 4.9 points to 58.0. Almost half (44%) of respondents expected to grow headcount, while only 6% predicted a reduction in staff numbers. The fixed investment outlook also improved, rising 2.9 points to 60.3. More than a third (38%) of respondents expected to boost investment spending, and only 4% predicted reduced levels of investment.
Global review
Globally, confidence remained steady at 62.4, now firmly in positive territory for four consecutive surveys, hovering between of 62.0 and 62.5. The United States was the most confident region at 63.5, Canadian confidence also remained positive, declining marginally by 1.1 points to 61.8, and Australasia saw a 3.7-point decline to 63.3. In Europe, the mood remained upbeat, as the European Union (EU) slipped slightly by 1.2 points to 61.8, and non-EU Europe edged down 1.7 points to 58.6. In Asia, confidence rose 1.3 points to 62.8, driven by an 8.8-point leap in China, and improved confidence in the Association of Southeast Asian Nations (ASEAN).
Elsewhere, confidence in Africa edged up 1.2 points to 57.5, yet it remains the second least-confident region, trailed only by the Middle East and North Africa (MENA) region, where confidence increased by 2.5 points to 53.2.
