The Mild Optimism Of CFOs

Editor Andrea Fiano's monthly letter to you, the reader.

SEPTEMBER 2020 | VOL. 34  NO. 8

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Polls and surveys rarely grab our attention; they don’t often signal a real change of attitude. But in times of real uncertainty, surveys can provide an interesting snapshot—almost like an X-ray—of change that is happening under the surface.  In times like the ones we are going through because of the coronavirus, survey data can be an early indicator.

Deloitte’s latest quarterly “CFO Signals” survey has found the optimism of North American CFOs has ticked upward. It is a subtle shift, but it suggests that some CFOs believe the worst might be over. The next 12 months are hardly rosy, with minimal growth expectations for capital expenditures and hiring (+0.2%), for example, and only a bit more in revenues (+1%). Surveyed CFOs expect more-substantial growth in earnings (+3.7%). All these numbers and expectations were in negative territory three months ago, and the growth in earnings is expected only for some industrial and commercial sectors and not for the overall economy. Only 43% expect better economic conditions within a year.

Yet their feelings about the prospects for their own companies has rebounded from an historic low. And their business focus has shifted back to revenue, displacing “cost reduction,” which had registered as the top priority for the first time ever in the second quarter survey. Even more interesting: North American CFOs are more optimistic about economic prospects in China than on their home turf.

Along similar lines, the cover story this month gauges the post-pandemic prospects for emerging markets, evaluating the effect of the health crisis on emerging markets in general and specific scenarios for different countries. Although all regions and all industries have been impacted, the effects have not been the same in China and in Africa, for example, or in Latin America and in Central Europe.

The rest of the stories in this issue, from our annual Digital Bank Awards to the treasury services supplement, are reconfirming—if there was any need—that business goes on even when tough times spark changing priorities.

Andrea Fiano | Editor