Global Executives Expect Strong Economic Growth for India and China, Less Optimistic About Japan, Europe and U.S.: RBC Capital Markets Global Survey

Feb 7, 2011 | Corporate Member News

India and China have the best prospects for economic growth over the next 12 months, while Japan and Europe have a more negative outlook, according to 461 finance and business leaders from around the world responding to the latest RBC Capital Markets survey.

Respondents are also bearish about the United States, with nearly two-thirds (65 per cent) expecting the U.S. economy to grow at a slower rate in the coming year than the previous decade’s annualized rate of 2.7 per cent. Specific to Canadian respondents, 40 per cent said that Canada’s growth over the next year would exceed its average growth over the past decade, while 33 per cent said growth would slow. The rest said Canada’s growth rate would remain unchanged.

The third semi-annual RBC Capital Markets Global Survey, commissioned by RBC Capital Markets and conducted by the Economist Intelligence Unit (EIU), polled executives on their outlook for the global economy.

According to the survey, 77 per cent of respondents believe that India’s prospects for economic growth over the coming year were better than they had been the previous year, and 76 per cent believe that China’s prospects are better. Africa and Russia, with 50 per cent expecting better prospects, also stood out. Only one-in-four executives polled (25 per cent) believe that Japan’s prospects will be better in the next year compared to last year.

When asked which regions will face worse economic prospects over the coming 12 months, 32 per cent of the executives surveyed cite Europe, while 28 per cent identify North America and 28 per cent believe Japan will face slower growth.

Concerns over sovereign debt and a desire for yield appear to be pushing investors into emerging markets. Almost three-quarters of survey respondents (73 per cent) expect valuations to be higher in the major Asian equity markets over the next 12 months, with the flow of funds intensifying global imbalances. Two-thirds of executives polled also expect the price of oil and the value of the Chinese renminbi to rise over the next year, while the euro, the dollar and U.S. treasuries are expected to weaken.

“In 2010, we saw emerging markets drive better-than-expected global growth, and there are clear expectations for that trajectory to continue,” said Marc Harris, co-head, Global Research, RBC Capital Markets. “We are likely to see not only a continued split between developing and developed nations, but also splits within developed regions, such as the U.S. and Europe, where the recovering U.S. economy and sovereign debt crisis in the European Union are driving the implementation of different policies.”

The survey highlighted changing views from the same survey six months earlier – namely, respondents are more discouraged about North America’s economy, yet more encouraged by the rest of the regional economies around the world. When asked in May 2010 about prospects for economic growth over the next year, 60 per cent of respondents said prospects were “better” for North America. However, by January 2011, that number fell to 48 per cent. At the same time, expectations improved for Africa: in May, 40 per cent saw prospects improving there, but by January, that number increased to 50 per cent. Expectations for improved economic growth in the Middle East also increased from 41 per cent in May to 48 per cent in January. Although Europe trailed in expectations in January with 36 per cent, this still represents a marked improvement from the 27 per cent of respondents who expected better prospects for the continent in May. Similarly, expectations for positive performance by the major European equity markets rose to 44 per cent, from 38 per cent in May.

The survey also revealed how the landscape is changing for global currencies. Though four-in-five of executives polled (80 per cent) said they expect the U.S dollar to be the dominant global currency over the next three years, the exact same share as the survey completed in May 2010, only 53 per cent believe the dollar will be dominant in five years, compared to 57 per cent in the spring survey. While only four per cent of executives believe the Chinese renminbi will be the dominant global currency in three years, 13 per cent believe it will be in five years. Additionally, a clear majority of executives (73 per cent) believe there is a possibility that oil will be priced in a currency other than dollars over the next three years.

“While most respondents think that conditions will improve in almost every major region of the world, they also believe that the recovery will take place at different speeds in different places,” said Richard E. Talbot, co-head, Global Research, RBC Capital Markets. “The timing of recovery is uncertain and investors will have to proceed cautiously, carefully evaluating each market’s prospects.”

About the survey
RBC Capital Markets commissioned the Economist Intelligence Unit to survey 461 senior executives from around the globe (North America [38 per cent], Western Europe [38 per cent], Asia Pacific [14 per cent] and Rest of the World [nine per cent]), including both clients and non-clients of the firm, on their outlook for the future of capital markets. The survey was completed in January 2011. The respondents included 211 senior executives from commercial and investment banks, hedge funds, asset managers, pension funds, sovereign wealth funds, institutional investors and private equity firms and 250 executives from non-financial companies active in the global capital markets.

About RBC Capital Markets
RBC Capital Markets is the corporate and investment banking arm of RBC and is consistently ranked among the top 15 investment banks globally. With over 6,000 employees, RBC Capital Markets is active globally in fixed income, foreign exchange, infrastructure finance, ECM, metals, mining and energy. Working with clients through operations in Asia and Australasia, the UK and Europe and in every major North American city, RBC Capital Markets provides products and services from 75 offices in 15 countries. For more information, please visit

Note to Editors:
For a copy of the research paper related to the survey, please follow the link below: 

For further information:

Europe and Asia:   RBC: Louisa Fairman – 44 (0)20 7029 7821
Greentarget: Dafina Grapci-Penney– 44 (0)20 7680 5052
United States:  RBC: Kait Conetta – (212) 428-6409
Sanam Alaghband – (212) 618-5589
Canada:    RBC: Gillian McArdle – (416) 974-5506

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