2017 Q4 Global CFO SignalsTM


2017 Q4 Global CFO Signals™

Time to be bold?

In the eight surveys included in this quarterly round-up, many of the responding CFOs voice positive outlooks about their organizations’ financial prospects, growth metrics, and, in many cases, their countries’ economic outlooks.

How does CFO sentiment in Q4 2017 break down?

A synopsis by region:
  • Australia: A strong global economy underpins rising optimism and risk appetite
  • Belgium: Ready for another solid year
  • Central Europe: Balanced optimism with risk aversion
  • Japan: Costs are all that matter
  • Netherlands: CFOs are hiring, but concerned about skills shortage
  • North America: Global economic growth underpins optimism headed into 2018
  • Russia: Optimistic despite weaker domestic demand
  • United Kingdom: Focus on cost control, no retreat from growth

Time to be bold?

In the fourth quarter of 2017, economic fundamentals were generally sound, if not ideal. Monetary policy remained favorable, uncertainty was muted, consumer demand was solid, and, in the United States, tax reform was quickly moving from promise to reality. Little wonder, then, that there are multiple signs of optimism in the Q4 2017 edition of Global CFO Signals.

In fact, in the eight surveys included in this quarterly round-up, many of the responding CFOs voice positive outlooks about their organizations’ financial prospects, growth metrics, and, in many cases, their countries’ economic outlooks. In North America, net optimism rose sharply from last quarter’s +29 to +47, despite continued uncertainty about future government policy. In Australia, 62 percent of CFOs say now is a good time to take greater risk onto their balance sheets—a new high. And across Central Europe, the proportion of CFOs expecting high or very high GDP growth in the next year has nearly doubled since the last survey (to 41 percent from 21 percent).

Fundamentals remain in great shape, if I were a CFO, I’d be pretty optimistic too.

— Patricia Buckley, Managing Director, Economic Policy and Analysis, Deloitte Services LP (US).

The question is: Given all the positive signs, will CFOs and their companies take the opportunity to make bold moves?

In some cases, there are indications that CFOs are at least considering doing so. In Belgium, for example, most growth indicators are higher than they were one year ago, and 85 percent of CFOs say implementing expansionary strategies has priority over defensive strategies. Across North America, CFOs indicate a strong bias toward revenue growth over cost reduction (61 percent vs. 18 percent). Meanwhile, more than half of Dutch CFOs say they will enter strategic partnerships in the next 12 months.

There are still plenty of undercurrents worth noting, however. In the UK, CFOs expect Brexit to negatively impact discretionary spending (55 percent), hiring (41 percent), and capital spending (39 percent) over the next three years. Australian CFOs voiced concerns about the impact that new regulatory changes and emerging technologies, such as artificial intelligence, might have on their bottom lines. And in North America, 84 percent of CFOs cautioned that equity markets were overvalued—a new survey high.

One issue that has become a larger concern this quarter is talent. In North America, nearly two-thirds of CFOs say securing and retaining quality talent will be difficult over the next year, and more than half say changing demographics will influence their talent strategies. In Central Europe, some 53 percent of CFOs point to a shortage of qualified workers as their greatest concern. That possible skills shortage is also the number one risk factor cited by 66 percent of CFOs in the Netherlands.

Whether the recent rumblings in the equity markets—or any of these other undercurrents—derails how bold CFOs can remain to be seen.

2017 Q4 CFO sentiment synopsis by region


While political turmoil captured many of the headlines in the fourth quarter, CFOs in North America were buoyed by global economic growth and equity markets that hit new highs. CFOs’ optimism about their own companies’ prospects rebounded to the third-highest level in the survey’s history. Earnings expectations rose further above their two-year average; and, although lower than last quarter, expectations for revenue, capital investment, and domestic hiring all remained above their two-year averages. Looking forward, CFOs’ perceptions of Europe’s economy rose and their optimism regarding China’s future prospects reached the highest level in five years. As for the North American economy, CFOs’ perceptions rebounded, with 74 percent saying current conditions are good (versus 64 percent last quarter). Their future outlooks are also positive despite trade policy being named one of their top concerns. From a CFO’s point of view, says Pierre Pettigrew, executive advisor, Deloitte Canada, all the talk of new trade policies supplanting NAFTA or other treaties may be unsettling given how “integrated” the economies are. After all, he asks, “How do you unmake the omelet?”


Positive signs for the future are on the rise in the two countries reporting in Asia-Pacific—Australia and Japan. In Japan, for example, 27 percent of surveyed CFOs indicate that they are “more optimistic” or “very optimistic” about their companies’ financial prospects, up from 14 percent last quarter. As for most worrisome risks, CFOs there are concerned about labor shortages and workstyle reforms on the domestic side, and relations between the US and North Korea and the stability of the Trump administration globally. In Australia CFO sentiment remains relatively optimistic, bolstered by improved hiring conditions and an uptick in both government and business investment in the Australian economy. In fact, says, David Rumbens, partner, Deloitte Access Economics (Australia), business investment bottomed out last year after four and a half years of declines. “Now, Australian CFOs are not only talking about being confident but starting to put their money where their mouths are,” he says.


Finally, in Europe, the outlooks are somewhat mixed. In the UK, for example, the Brexit overhang continues to plague CFOs. The largest businesses there entered 2018 more focused on controlling costs than at any time in the last eight years. Still, this hasn’t led to a collapse in business sentiment compared with other times of uncertainty, such as during the euro debt crisis. Cost control remains a priority among Russian CFOs, too, even though 53 percent report being more optimistic about their companies’ financial prospects. Across Central Europe, CFOs optimism has dropped to 27 percent down from 33 percent last year, despite optimism regarding revenue, operating margins, and GDP rates. Meanwhile, in the Netherlands, CFOs’ views toward uncertainty have also dropped, with 45 percent now saying it is high or very high, down from 71 percent in Q3 2017. And, in Belgium, where the net optimism comes in at +34, expansionary strategies, including organic growth and digitization, are top priorities. Michael Grampp, chief economist, Deloitte Switzerland, expects that those priorities might not be limited to Belgium. “This year, we will see a lot of impact from additional investments, and a large focus will be on digitization,” he says.

Going forward, the Deloitte economists interviewed note that there are a host of factors that could derail the positive outlooks, including inflation, a breakdown in Brexit talks, and the continued political turmoil in the US. There are also “risks that are not as visible,” says Rumki Majumdar, an economist with Deloitte India, citing rising household debt in Asian markets. And then, she adds, there are the risks that have been visible for some time. “For example, we’ve known for a while that the optimism among investors may not justify the rise in equity prices we have seen.

Global CFO Signals: By the numbers

Risk appetite

Companies’ risk appetites were mixed this quarter. In Australia, some 62 percent of CFOs said now is a good time to take greater risk onto their balance sheets—the strongest result since the survey’s inception. Likewise, in Belgium, CFO’s risk appetites improved to 45 percent from 39 percent in Q4 2016. But, in the UK, the Brexit overhang has kept CFOs risk appetites at around 21 percent for the last year. Meanwhile, 69 percent of Central Europe’s CFOs do not think it’s time to add risk, and neither do 67 percent of CFOs in the Netherlands (up from 42 percent last quarter).


Many CFOs believe external financial and economic uncertainty will continue to moderate. In the UK, for example, 38 percent of CFOs in the UK rate the level of uncertainty as “high” or “very high,” but that is significantly lower than during the euro crisis in 2011-2012 or following the EU referendum in 2016. Uncertainty in Japan dipped again, with the proportion of CFOs labeling uncertainty as “high” or “very high” falling to 44 percent, the first time it has dipped below 50 percent in the last year. A similar story can be found in Australia, where close to half of CFOs rate uncertainty as “above normal,” down from 78 percent a year ago. But in Russia perceptions of uncertainty increased for the first time since 2015.


In North America, Q4 2017’s 4.7 percent expectation for year-over-year revenue growth was down from last quarter’s 5.7 percent, but still above the two-year average. Elsewhere, CFOs are more upbeat, particularly in Belgium and Central Europe, where 85 percent and 73 percent of CFOS, respectively, expect increases. In line with increased optimism, 66 percent of Japanese CFOs expect an increase in earnings. Yet, in the UK, where revenue expectations remain positive, a net 66 percent of CFOs expect operating costs to rise, close to the highest percentage in more than six years.


As for hiring, it is back on the agenda in several countries. Seventy percent of Belgium’s CFOs expect to hire over the next 12 months, as do 48 percent of CFOs in the Netherlands, 46 percent of CFOs in Central Europe, and 29 percent of CFOs in Russia. Some 41 percent of the UK’s CFOs think hiring will decrease because of Brexit, and in North America, this quarter’s domestic hiring growth expectation fell from 2.6 percent to 2.0 percent. Meanwhile, fear of a skills shortage was a top concern in many of the survey reporting, including Belgium, Central Europe, and the Netherlands.

Corporate strategy

The expansion is the theme in several surveys. In Belgium, 85 percent of CFOs said implementing expansionary strategies was a higher priority than defensive strategies. In North America, about 61 percent of CFOs said they were biased toward revenue growth, while only 18 percent claimed a bias toward cost reduction. In the Netherlands, 74 percent of Dutch CFOs expect M&A activity to increase. But caution still reigns in the UK: CFOs entered 2018 more focused on reducing costs (51 percent) than at any time in the last eight years. Meanwhile, in Russia, two of the top strategies cited involved reducing costs.

Interest rates

CFOs expect interest rate hikes, but seem to be taking the prospect in stride. In Belgium, there is a strong consensus among CFOs that the European Central Bank will raise rates this year, but most CFOs do not expect it to affect their growth strategies. Similarly, in Central Europe, 55 percent expect hikes, but CFOs say they won’t change course, due partly to the low impact that rates have on their business. In the UK, 85 percent of CFOs believe the Bank of England’s base rate will be 0.75 percent or above in a year’s time, up from 42 percent in Q3. In Australia, however, 69 percent of CFOs expect rates to stay the same, up from 58 percent.

To access previous Global CFO Signals reports, please visit the Global CFO Signals library page.

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