Strategy & Corporate Finance Practice

Economic conditions
outlook during turbulent
times, December 2023
With geopolitical concerns the highest they have been all year, respondents’
views on the global economy continue to sour—but remain cautiously
optimistic about economic conditions at home.

December 2023
As the year draws to a close, global respondents
expect the threat of geopolitical instability and
conflicts to persist well into 2024.
In our latest McKinsey Global Survey on economic
conditions,1 the largest percentages we’ve seen
all year say geopolitical instability is a top threat to
economic growth. Respondents maintain a largely
positive view of their own economies, even as
concern about political transitions and geopolitics
has risen. But their earlier optimism about the
global economy, and about their companies’
workforce growth and profits, has ebbed somewhat.
One bright spot is the interest rate environment.
Compared with earlier in 2023, respondents cite
high interest rates as a risk to growth less often,
and are less likely to believe their countries’ interest
rates will increase.
Geopolitics continue to overshadow
all other risks to global growth,
and executives are wary
When we ask respondents about the top threats
to global economic growth in 2024, they cite
geopolitical instability and conflicts more often than
they have all year. Geopolitical concerns are cited
by 67 percent of respondents and, as has been the
case throughout 2023, remain the most common
risk in every region. This also marks the largest
share of respondents identifying geopolitical issues
as a top risk since our March 2022 survey, shortly
after the war in Ukraine began.
On the other hand, fears about inflation as a
risk to global growth seem to have receded. It’s
now selected as often as transitions of political
leadership, which respondents are three times more
likely to cite now than they did in March (Exhibit 1).

Respondents cite geopolitical

instability as a risk to global growth
more often than they did in the
previous three quarters of 2023.

1
The online survey was in the field from November 28 to December 1, 2023, and garnered responses from 942 participants representing the
full range of regions, industries, company sizes, functional specialties, and tenures. To adjust for differences in response rates, the data are
weighted by the contribution of each respondent’s nation to global GDP.

Economic conditions outlook during turbulent times, December 2023 2

Web <2023>
<OutlookPolling>
Exhibit 1
Exhibit <1> of <6>

Geopolitical concerns still dwarf other threats to global growth, while inflation
falls further and political transitions emerge as a top risk.

Biggest potential risks to global economic growth, next 12 months,1 % of respondents

100 Geopolitical instability

and/or conflicts

Slowdown in China’s
economic activity²
80
Volatile energy prices

Inflation
60

Transitions of political
leadership
40

20

Mar 2023 June 2023 Sept 2023 Dec 2023

1
Out of 16 potential risks that were presented as answer choices. Mar 27–31, 2023, n = 871; June 5–9, 2023, n = 1,044; Aug 31–Sept 8, 2023, n = 997; Nov
27–Dec 1, 2023, n = 942.
²“Slowdown in China’s economic activity” was not included in the list of potential risks in the Mar 2023 and June 2023 surveys.
Source: McKinsey Global Surveys on economic conditions, 2023

McKinsey & Company

Meanwhile, after a year of inconsistent quarter-
over-quarter sentiment on the world economy,
respondents’ views are evenly divided between
buoyance and caution (Exhibit 2). The same share
(35 percent) believe economic conditions are
either better now or worse than they were six
months ago.
By region, we also see a notable gap between
respondents in Greater China,2 57 percent of whom
say the global economy is on an upswing, and their
peers in the rest of the world (Exhibit 3). We saw
the same regional differences in global sentiment
throughout the year, though respondents in Greater
China were more positive about the state of the
world economy last quarter than they are now.3

2
Includes Hong Kong, Macau, and Taiwan.
3
In our September 2023 survey, 79 percent of respondents in Greater China said that conditions in the global economy had improved in the past
six months, versus 25 percent of respondents in all other regions. In December 2023, just 57 percent in Greater China—versus 28 percent of all
other respondents—say the same.

Economic conditions outlook during turbulent times, December 2023 3

Web <2023>
<OutlookPolling>
Exhibit 2
Exhibit <2> of <6>

Respondents are evenly split on whether conditions in the world economy have
improved or worsened in recent months.

Current conditions in global economy compared with 6 months ago,¹ % of respondents

Dec 2022 Mar 2023 June 2023 Sept 2023 Dec 2023

41
36 35 Better
28 33

30 31 Worse
35
46
54

1
Respondents who answered “the same” are not shown. Nov 28–Dec 2, 2022, n = 1,192; Mar 27–31, 2023, n = 871; June 5–9, 2023, n = 1,044; Aug 31–Sept 8,
2023, n = 997; Nov 27–Dec 1, 2023, n = 942.
Source: McKinsey Global Surveys on economic conditions, 2022–23

McKinsey & Company

Overall, respondents’ global outlook remains
slightly more positive than their views on the
economy’s current state, as we’ve seen all year.
But respondents are not as optimistic as they
were six months ago. Back in June, 44 percent
of respondents believed conditions in the world
economy would improve by now. Now only
37 percent expect the global economy to improve
in the months ahead.
Again, we see more positivity in Greater China.
Fifty-eight percent of respondents expect
improvements in the world economy, compared with
an average of 31 percent in all other regions.
Even as risks shift, domestic sentiment
holds steady (and positive)
For the first time in 2023, geopolitical instability
tops the list of threats to growth in respondents’
own countries. Meanwhile, concerns over political
transitions have risen. This risk is now cited fourth
most often as a threat to domestic growth, and more
than twice as often as it was in March (23 percent

Economic conditions outlook during turbulent times, December 2023 4

Web <2023>
<OutlookPolling>
Exhibit 3
Exhibit <3> of <6>

Respondents in Greater China are more positive about current global

conditions than their peers elsewhere.

Current conditions in global economy compared with 6 months ago,¹ % of respondents by office location

Greater China²

Developing
markets³ Asia–Pacific

Latin America
India Europe
57
40 40 North America

31 25
25 Better
19

16
35 29 Worse
36
45 47
47

1
Respondents who answered “the same” are not shown. Greater China, n = 112; developing markets, n = 75; Asia–Pacific, n = 94; Latin America, n = 71; India, n =
88; Europe, n = 282; and North America, n = 220.
²Includes Hong Kong, Macau, and Taiwan.
³Includes Middle East, North Africa, South Asia, and sub-Saharan Africa.
Source: McKinsey Global Survey on economic conditions, Nov 27–Dec 1, 2023, n = 942

McKinsey & Company

versus 10 percent). Respondents in India cite
political transitions much more often than their
peers, at 49 percent, followed by 29 percent each
in North America and Latin America.
In Latin America, another politics-related risk is top
of mind. Respondents in this region are nearly twice
as likely as others to cite domestic political conflicts
as a threat to growth in 2024 (Exhibit 4).
The results also indicate that concerns about
interest rates continue to ebb. High rates are now
the 13th most cited risk to domestic growth (out of
18 potential risks), after being at least a top five risk
in the past three quarters. In June and September,
we reported in detail on the expected changes
in domestic interest rates. Now, just 32 percent
of respondents expect a rate hike in the next six
months (the lowest share all year to say so)—versus
60 percent in March—with a plurality of 40 percent
believing their countries’ rates will hold steady.

Economic conditions outlook during turbulent times, December 2023 5

Web <2023>
<OutlookPolling>
Exhibit 4
Exhibit <4> of <6>

In Latin America, respondents are more concerned than other regions about
political conflicts and transitions.
Biggest potential risks to domestic economic growth, Latin America
next 12 months,¹ % of respondents by office location All other regions

44
+21
percentage +7 36
points
29 30
23 24
22 20
18 19

Domestic Transitions of Weak demand Inflation Geopolitical instability

political conflicts political leadership and/or conflicts

1
Out of 18 risks that were presented as answer choices. The risks shown reflect the top 5 threats to growth selected by all respondents. In Latin America, n = 71;
in all other regions, n = 871.
Source: McKinsey Global Survey on economic conditions, Nov 27–Dec 1, 2023, n = 942

McKinsey & Company

Comparing regions, respondents in Greater China
and Asia–Pacific are the most likely to expect
increasing rates. The results from Greater China
mark a significant change from last quarter, when
just 35 percent expected interest rates to rise—
compared with 50 percent this quarter. In both
Europe and North America, much smaller shares of
respondents now expect a rate hike than they did in
the third quarter.
When asked about their economies on the whole,
respondents remain more positive than negative
(Exhibit 5). By region, respondents in India
and Greater China are the most positive about
conditions at home—which we have seen in the past
two quarters—followed by those in North America.
Meanwhile, the view from Europe is the most
downbeat, which was also true last quarter.
The six-month outlook is more optimistic than
downbeat, consistent with respondents’ views on
current conditions. On average, 46 percent believe
conditions in their home economies will be better
in the next six months, compared with 26 percent

Economic conditions outlook during turbulent times, December 2023 6

Web <2023>
<OutlookPolling>
Exhibit 5
Exhibit <5> of <6>

Respondents continue to have more favorable than critical views on conditions

in their home economies.

Current economic conditions in respondents’ countries, compared with 6 months ago,1

% of respondents
50
45
48 41
Better
40
33

30 Worse
30
28

20

10

Mar 2023 June 2023 Sept 2023 Dec 2023

1
Respondents who answered “the same” are not shown. Mar 27–31, 2023, n = 871; June 5–9, 2023, n = 1,044; Aug 31–Sept 8, 2023, n = 997; Nov 27–Dec 1,
2023, n = 942.
Source: McKinsey Global Surveys on economic conditions, 2023

McKinsey & Company

who expect things will worsen. Across geographies,
respondents in most regions tend to have a rosier
outlook on their own economies than on the world
economy (Exhibit 6). The only exceptions are in Latin
America, in the developing markets, and in Europe—
where just 22 percent of respondents expect
conditions at home will improve in the months
ahead. When asked about conditions in the global
economy, 32 percent in Europe say the same.
the cautious optimism they share about the global
economy. Their positivity about future profits
has declined since September’s survey, but they
remain largely upbeat (60 percent believe profits
will increase, down from 66 percent), while a
plurality of respondents now believe the size of their
companies’ workforce will stay the same. In the past
three quarters, respondents were most likely to
expect that workforce size would grow.

With respect to demand for their companies’

Respondents report a positive—albeit offerings, respondents are as optimistic as they
restrained—company outlook for 2024 were last quarter. Fifty-seven percent still believe
When asked about their companies’ prospects in demand will increase, with larger percentages
the coming months, respondents’ answers echo saying so in healthcare and pharma; technology,

Economic conditions outlook during turbulent times, December 2023 7

Web <2023>
<OutlookPolling>
Exhibit 6
Exhibit <6> of <6>

In most regions, respondents share a more positive outlook for economic

conditions at home than for the world economy.

Respondents reporting better economic In their own economies

conditions, next 6 months,1 % of respondents In the global economy

70
67

58

50
44
39 38
35 35
32 33 32

22
20

Greater India Asia–Pacific North Latin Developing Europe

China² America America markets³

1
Respondents who answered “the same” or “worse” are not shown. Greater China, n = 112; India, n = 88; Asia–Pacific, n = 94; North America, n = 220; Latin
America, n = 71; developing markets, n = 75; and Europe, n = 282.
²Includes Hong Kong, Macau, and Taiwan.
³Includes Middle East, North Africa, South Asia, and sub-Saharan Africa.
Source: McKinsey Global Survey on economic conditions, Nov 27–Dec 1, 2023, n = 942

McKinsey & Company

media, and telecommunications; and energy
and materials. At the same time, private sector
respondents continue to say—as they have
throughout 2023—that their companies have
increased prices in the past six months. This is
especially true in retail and consumer packaged
goods, where 74 percent of respondents (versus
56 percent of all respondents) report raising
their prices.
In terms of company-level risks, geopolitical
conflicts are again a top five threat to growth—as
they were in the first and second quarters, but not
in the previous survey. Supply chain disruptions,
however, are cited by the smallest share of
respondents (12 percent) since September 2021.
The view from the C-suite
We also asked executives about their leadership
teams’ most important priorities in 2024. Of eight
potential issues, they rank achieving robust,
consistent growth, building distinctive institutional
capabilities, and digitizing the enterprise as their top
priorities for the year ahead. Generative AI (gen AI)
is fourth on the list, while geopolitical risks and

Economic conditions outlook during turbulent times, December 2023 8

 resilience rank lowest as a top priority for 2024—
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despite the broader concerns about geopolitical
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instability that respondents have expressed
throughout 2023.4
Executives cite the same three priorities—growth
(46 percent), distinctive capabilities (44 percent),
and digitization (44 percent)—as the ones their
organizations are best prepared to manage
next year. Meanwhile, much smaller shares of
respondents say the same about gen AI (just
22 percent) or geopolitical risks (15 percent).
When asked which priorities present the biggest
opportunities for their companies in 2024,
digitization, growth, and capabilities again top the
list, followed by gen AI.

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4
Total n = 323, including executives in the private sector (n = 302) and those at state-owned enterprises (n = 21). Of them, 34 percent rank
achieving robust, consistent growth as their leadership teams’ top priority in 2024; 20 percent say so for distinctive institutional capabilities;
18 percent for digitization of the enterprise (that is, digital and AI transformations); 10 percent for generative AI; 6 percent for the energy
transition; 5 percent for macroeconomic volatility; 5 percent for middle managers’ role and impact in the organization; and 3 percent for
geopolitical risks and resilience.

The survey content and analysis were developed by Jeffrey Condon, a senior knowledge expert in McKinsey’s Atlanta office;
Krzysztof Kwiatkowski, a capabilities and insights expert at the Waltham Client Capabilities Hub; and Sven Smit, chair of
insights and ecosystems, chair of the McKinsey Global Institute, and a senior partner in the Amsterdam office.

They wish to thank Homayoun Hatami and Liz Hilton Segel for their contributions to this work.

Designed by McKinsey Global Publishing

Copyright © 2023 McKinsey & Company. All rights reserved.

Economic conditions outlook during turbulent times, December 2023 9