Ernst & Young Survey Indicate Global Economy Outlook Stable & Improving, Upbeat On Job Market Outlook

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A survey conducted by Ernst and Young indicated that the global economic outlook remains stable and is improving. This was evident when 64 percent of the respondents in the automotive sector indicated that they felt global economy was either stable or improving, a similar sentiment expressed by its international survey participants too.

The survey report comes on the aftermath of debt crisis in the Eurozone, US credit rating downgrade and uncertain economic scenario dragging the stock markets around the world besides the reprising risk. The respondents also indicated that July and August witnessed a return of volatility that was not seen after the economic disaster in 2008.

While 25 percent of the respondents from the automotive sector expressed optimism about improving global economic outlook, 39 percent of the respondents believed that economy is stable. Twenty-eight percent of the respondents see the economy modestly falling, whereas 8 percent felt that economy is strongly declining.

Contrary to the belief about bleak employment outlook, Ernst & Young survey pointed out that 86 percent of the respondents felt that they would either retain or create and hire more talents during the next 12 months period. Only 14 percent of the respondents felt that they would reduce ! jobs. Wi thin the automotive sector, 89 percent favored retention or creating and hiring more talents, whereas 11 percent of the respondents preferred to cut jobs.

Another interesting feature is that 71 percent of the automotive respondents felt that availability of credit is stable or positive. North America and Europe topped the list for positive trend with 32 percent and 30 percent respondents favoring it, while Asia-Pacific saw 10 percent of the respondents believing favorable conditions for credit availability.

The research conducted by the financial institution also indicates that 68 percent of the respondents are not in favor of refinancing its debt over the next 12-month period since most of them had already reduced indebtedness apart from extending maturity period or have finalized refinancing. Still, the survey indicates that 32 percent of respondents are planning for refinancing compared to 15 percent of respondents in a survey conducted in April 2011.

The corporate earnings outlook also remains stable and positive. Eighty-five percent of the respondents surveyed believe that corporate earnings will be stable and positive and only 15 percent of the respondents remained negative about corporate earnings forecast for the next 12 months.

The current economic instability is also allowing the automotive sectors to look for merger and acquisitions for consolidation, as interest rates are cheaper than ever. The survey indicates that 39 percent of the respondents are expecting to make acquisitions during the next 12 months, up from 25 percent recorded in April survey.

In response to the countries where the automotive respondents would make outbound investments, China tops the list for most favored nation for acquisition followed by India, Germany, Brazil and the U.S. Singapore, Mexico and South Africa are the most popular emerging market destinations after the BRICs.

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