Global chief financial officers are entering 2014 in a different mood than a year ago, according to Deloitte Touche Tohmatsu in a report on the first quarter.
Deloitte’s survey shows that what is missing is the concern over the euro zone and the US “fiscal cliff” that once dominated headlines.
While other macroeconomic risks have emerged – notably changing attitudes towards monetary policy – CFOs seem more focused on internal issues and planning for growth. And they are aided in many countries by less external uncertainty, strong balance sheets and favourable credit conditions.
Such conditions have led to the strengthening of CFO optimism in several countries.
In the UK, for example, business optimism is at its highest in three and a half years. Optimism in North America rose from a strong 42 per cent last quarter to an even stronger 54 per cent this time. And in the inaugural Southeast Asia survey, 44 per cent of CFOs reported a positive outlook despite worries over the Chinese economy and political uncertainty.
Not every country is recovering at the same rate. Several Central Europe countries, for example, are hampered by stagflation and continued uncertainty. Still, in the countries in that region reporting, more CFOs have become more optimistic about their companies’ prospects than have become less optimistic.
In India, where CFOs were in a state of “pause” awaiting the national election, 68 per cent still believed the economy – and their prospects – would be better in a year.
That current and future optimism is driving continued expansionary intentions in many countries. In Switzerland, for example, 44 per cent of CFOs expect investment to rise over the next 12 months, and 90 per cent of Dutch CFOs predict higher M&A (mergers and acquisitions) activity over that same time.
For their part, Australian CFOs report risk appetite at its highest in four years. And in Belgium, more than half are budgeting over 2-per-cent growth and 20 per cent aiming for 5 per cent.
The biggest question now is, will companies accelerate their plans – and when? Equipped with the internal wherewithal and the external green light to invest, CFOs seem firmly in the driver’s seat. The next quarter may reveal whether they rev the engine or remain content to travel in low gear.