Oil and gas capital confidence barometer
Economic outlook
Inside
Global economic outlook has weakened
After a turbulent period in the second half of 2011, the global economy showed some signs of stabilizing in early 2012. But the hoped-for recovery never really gained traction. As the slowdown persists in both the developed and emerging economies, oil and gas companies are significantly less optimistic about the future than they were six months ago.
27% of oil and gas respondents view the global economy as improving, less than half the 55% in April 2012.
Only 27% of respondents believe the global economic situation is improving, down from 55% in April. More companies report declining sentiment, from 15% to 23%. Oil and gas companies are, however, less pessimistic than the broader global sample of respondents.
What is your perspective on the state of the global economy today?
Almost half of our oil and gas respondents (46%) expect the global economic downturn to persist for another one to two years, while 15% predict it will last more than two years. With slow growth expected to continue, many companies are focusing on bottom line improvements and low-risk organic growth opportunities. Few see the urgency for conducting major M&A transactions in such an uncertain climate.
Local economic sentiment also weakens
In line with the global results, local economic sentiment has also declined. Once again, the oil and gas respondents were slightly less pessimistic than the broader sample, with a notable increase since the April survey in the stable sentiment. By and large, the countries with the most negative sentiment are those most affected by the Eurozone crisis and by the slowing growth of China.
What is your perspective on the state of the local economy today?
Expectations have declined markedly for corporate earnings, with only 36% of oil and gas respondents positive about the outlook in October 2012, compared with 52% in April. Oil and gas companies are less confident about corporate earnings despite strong recent reported performance.
Similarly, economic growth, employment growth and credit availability also show less confidence in the latest survey. In light of the economic challenges, the percentage of oil and gas respondents planning to create jobs has decreased from 43% in April to 34% in October, but the percentage of respondents that expected to keep their current workforce size increased significantly from 48% to 59%.
This may reflect a wait-and-see attitude among companies that are simultaneously unwilling to take risks but reluctant to lose flexibility should better times return.
