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2011 began optimistically, with surveys showing high levels of business confidence. For example, 75 percent of the 665 senior finance executives in 11 countries who responded to the 2011 American Express/CFO Research Global Business and Spending Monitor, published in May, said that they expected their local economies to expand in the following 12 months.

Contrast this positive attitude with the International Monetary Fund’s update of its World Economic Outlook, released on 20 September. It stated:

‘The structural problems facing the crisis-­‐hit advanced economies have proven even more intractable than expected, and the process of devising and implementing reforms even more complicated. The outlook for these economies is thus for a continuing, but weak and bumpy, expansion. Prospects for emerging market economies have become more uncertain again, although growth is expected to remain fairly robust, especially in economies that can counter the effect on output of weaker foreign demand with less policy tightening’.


The economic recovery in developed economies has proved to be frustratingly weak and slow, and this is seen very clearly in the US, with its stubbornly high unemployment rate.

However, there were a number of positive key performance indicators for the US economy, particularly in the early months of 2011. For example, the American Express/CFO Research Global Business and Spending Monitor indicated that after collapsing during the 2008–2009 recession, US company profits in the second quarter of 2011 had posted their strongest and fastest recovery in more than 50 years. As a share of GDP, profits, which had rocketed up to 12.9 percent of GDP, were at a level not seen since the early 1950s. US businesses had been able to post record profits, in part, due to the strength of their overseas operations.


The same source (American Express/CFO Research Global Business and Spending Monitor) was among several indicating that European business confidence was already lower than that of other world regions, even in the first half of 2011: only 61 percent of their European respondents anticipated economic expansion over the next 12 months, compared with three-­‐quarters of all respondents all around the world.

Now, as we approach the end of this year, it is clear that the European economy faces multiple risks. Most significantly, the Eurozone sovereign debt crisis has yet to be convincingly contained, and there is a considerable risk that financial market contagion could drive the European economy back into recession.

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