2016 Q2 Global CFO SignalsTM


2017 Q2 Global CFO SignalsTM

Riding a synchronized recovery

In the nine surveys featured in this edition, many CFOs voice positive outlooks about their financial prospects, their key metrics, and in many cases their countries’ economic outlooks. Their optimism is fueled by the strength of developed economies that is spilling over into emerging markets and shoring up business prospects.

How does CFO sentiment in Q2 2017 break down?

A synopsis by region:
  • Australia: Positive global outlook drives optimism
  • Belgium: Optimistic business sentiment accelerates focus on growth
  • India: Resilient in the face of uncertainties
  • Japan: Stable corporate earnings; North Korea draws attention
  • Netherlands: Risk appetite increases, M&A activity to soar
  • North America: Growing concerns about political and policy uncertainty
  • Russia: Slow and steady recovery
  • Switzerland: Optimistic summer
  • United Kingdom: Post-election dip in confidence

Riding a synchronized recovery

With a synchronized economic recovery apparently underway, CFOs in this Q2 2017 edition of Global CFO Signals seem to be enjoying the ride.

In fact, many CFOs in the nine surveys featured voice positive outlooks about their financial prospects, their key metrics, and, in many cases, their countries’ economic outlooks. Their optimism is fueled by the strength in many developed economies that is spilling over into emerging markets and shoring up business prospects.

Since the economies in the world, including most of the industrialized ones, are now roughly in expansion synchronization that bodes well across the board.

                       – Patricia Buckley, managing director, Economic Policy and Analysis, Deloitte Services LP

That confidence is on display in surveys conducted in several regions. In North America, for example, where net optimism has been strong for several quarters, some 55% of CFOs now report positive outlooks, despite continued uncertainty about policy and politics. In Australia, where global trade, a competitive exchange rate, and low interest rates have bolstered confidence, CFOs are also solidly optimistic (net +26). And in Switzerland, where a net +18 of CFOs report being optimistic, views of uncertainty have fallen to their lowest level since the exchange rate floor was removed in 2015.

Other CFOs’ attitudes are reflected in strong growth expectations. In Japan, 52% of CFOs forecast increased earnings, and revenues are expected to tick up in Belgium and Switzerland. Elsewhere, capital spending expectations came in at 9% in the North American survey, and 48% of India’s CFOs expect their workforces to grow as do 30% of Russian CFOs.

That does not mean CFOs are ignoring the many challenges they currently face, as well as others on the horizon. In the United Kingdom, CFOs expect Brexit to negatively affect capital spending (33%), hiring (38%), and discretionary spending (49%) over the next three years. Japan’s CFOs are increasingly concerned about North Korea, whereas CFOs in Switzerland are worried about uncertainties in the United States and the UK. And the rapid evolution of digital technology has some CFOs wary of talent shortages.

Despite so many unknowns, CFOs seem to be able to compartmentalize and prioritize.

CFOs have been citing rising volatility in the business environment as a top challenge for several years. Even so, our survey findings seem to indicate that they are not waiting for anything to get resolved—and that they continue to push forward on the investments they think make the most sense for the future.

        – Greg Dickinson, managing director, Deloitte LLP, who leads the North American CFO Signals survey

2017 Q2 CFO sentiment synopsis by region


The post-election period in North America appears to have left CFOs very optimistic—the Q1 2017 survey registered the sharpest uptick in sentiment in its seven-year history, and while this quarter was not as strong, it was nevertheless solid, with a net optimism of +44. In addition, CFOs’ business focus on offense over defense for the next year hit a new survey high. Sixty-three percent of surveyed CFOs also say they are biased toward revenue growth, one of the highest levels in the survey’s history, and only 18% claim a bias toward cost reduction.

Moreover, the bias toward investing cash over returning it to shareholders (62% versus 16%) hit another three-year high. Still, global economic growth and government regulation sit near the top of CFOs’ list of most worrisome external risks, and were joined this quarter by rapidly rising concerns about US political and policy uncertainty, and geopolitical risks and conflicts.


For the three countries reporting in Asia-Pacific—Australia, India, and Japan—there are stabilizing, if not upbeat, signs. In Japan, for example, 78% of surveyed CFOs indicate that their views toward their companies’ financial prospects have not changed this quarter. That is despite the growing list of risk scenarios, which now includes North Korea’s intercontinental ballistic missile launch (54%), the US/Russia situation (48%), and perceived overheating in China’s economy (46%).

Meanwhile, in India, optimism about economic prospects has reached new heights and is leading to greater risk appetite among CFOs (59% up from 46% in 2016). Finally, in Australia, CFOs are buoyed by higher rates of growth in Asia, which stimulates demand for Australian exports, as well as the decline in interest rates. Says David Rumbens, partner, Deloitte Access Economics: “One other trend to note is Australian CFOs’ attitudes toward China, which 12 months ago were relatively negative and now have turned strongly positive.”


Finally, in Europe, there is a disconnect among the countries reporting—Belgium, Netherlands, Russia, Switzerland, and the UK. While four of the five registered solid optimism, the fallout from the general election in the UK has left them retracting again. In fact, 72% of CFOs now expect some negative long-term effects on the business environment as a result of the UK’s departure from the European Union (EU), up from 60% in the first quarter. Elsewhere, the news is more upbeat, such as in Belgium, where optimism increased for the fourth quarter in a row, or in Russia where some 51% of CFOs report positive outlooks.

Meanwhile, in the Netherlands, risk appetite among CFOs increased to 56%, up from 40% in the past two consecutive quarters; and in Switzerland, CFOs’ expectations for the country’s economic prospects over the next 12 months are currently at their highest level since mid-2014. Says Michael Grampp, chief economist at Deloitte AG (Switzerland): “Despite such optimism, there are more internal risks coming up in our surveys. Specifically, we are seeing technical change emerging as a risk, but also as an opportunity.”

Going forward, the Deloitte economists interviewed noted that more internal—as well as external—surprises could occur, some worse than others. That’s even more reason, says Grampp, for CFOs “to stay focused on the positive.”

Global CFO Signals: By the numbers

Risk appetite

Improving optimism in many reporting countries is leading to increased risk appetite. In the Netherlands, for example some 56% of CFOs say now is a good time to take greater risk onto their balance sheet—up from 40% in each of the last two quarters—and 49% of Australia’s CFOs think it’s time to add risk, up for the third time in as many quarters. Meanwhile, in Belgium, the percentage has improved to 69%, the highest level ever recorded in the survey. But in the UK, Brexit continues to be a drag, with only 22% of CFOs saying now is a good time to take on risk.


Concerns about uncertainty continue to moderate. In Japan, 57% of CFOs believe economic and financial uncertainty is either “high” or “very high,” compared with 80% in Q4 2016. In Switzerland, perceived uncertainty in the economic and financial environment is now at its lowest level since the removal of the exchange rate floor in early 2015, and sentiment in Australia has also moderated from the H2 2016 report, when 78% of CFOs put it between “above normal” and “very high.” Uncertainty is up in the UK, however, in the wake of the general election.


In North America, this quarter’s 5.6% expectation for year-over-year revenue growth is up solidly from last quarter’s 4.3% and above its two-year average. Elsewhere, CFOs are also upbeat about revenue increases, particularly in Belgium (where almost half expect an increase of more than 5%), India (79%), and Switzerland (76%). Although down from last quarter, a healthy 52% of Japanese CFOs expect an increase in earnings, and 52% expect operating profits to rise. Meanwhile, in the UK, capital expenditure and discretionary spending expectations have dipped.


As for hiring, the outlook is mixed. Forty-eight percent of India’s CFOs expect to hire over the next 12 months, as do 30% of Russia’s CFOs; in North America, this quarter’s domestic hiring growth expectation held steady at 2.1% from the previous quarter. Some 38% of the UK’s CFOs, however, think hiring will decrease because of Brexit, but that is down from 66% in Q2 2016 right after the vote. Still, one of the top worries among Belgium’s CFOs is that they will not be able to meet their recruitment requirements in the next 12 months.

Corporate strategy

Signs of expansion abound. Continuing the trend from last quarter, 63% of North American CFOs say they are biased toward revenue growth (one of the highest levels in survey history), and only 18% claim a bias toward cost reduction (one of the lowest). A full 94% of CFOs in the Netherlands expect increased M&A activity. And several surveys asked about digitalization, including Switzerland, where four in every five CFOs report that their company is prioritizing investment in this area. Yet, UK CFOs have retreated relative to the first quarter, placing much greater emphasis on defensive strategies such as cost reduction (46%), increasing cash flow (36%), and reducing leverage (14%).

Interest rates

CFOs foresee interest rate hikes in several countries. Some 30% of Switzerland’s CFOs expect a return to positive rates in three years, up from 17% who thought so in Q4 2015. In the UK, 59% expect the Bank of England’s base rate to be above its current level of 0.25% in a year’s time, down from 71% in the first quarter. But the view is a little different in Australia, where 58% expect rates to remain around the same level, 40% expect them to fall further, and only 1% expect a rise.

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

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