Important points
- According to KPMG's 2023 CEO Outlook Survey, CEOs rank geopolitics and political uncertainty as the biggest risk to business growth over the next three years.
- Just over half of investors surveyed by Investopedia said they were concerned that politics and the 2024 US presidential election would affect their investments over the next 12 months.
- KPMG reports that despite concerns about political instability, almost three-quarters (73%) of CEOs are confident in global economic growth over the next three years.
Politics has become a top concern for many business leaders since last week's political standoff threatened to lead to a U.S. government shutdown, and a recent KPMG survey found that CEOs are more concerned about geopolitics and political dissatisfaction. They identify certainty as the biggest risk to company growth over the next three years.
CEOs' concerns about political instability show the U.S. government narrowly avoided a government shutdown and deep rifts within the federal government could harm the nation's budget, credit rating and financial markets Kevin・This occurred in response to the passing of a resolution to dismiss Speaker McCarthy of the House of Representatives.
Geopolitics and political uncertainty have not always caused CEOs concerns. In fact, they aren't even among CEOs' top five concerns in 2022, according to KPMG, indicating a significant shift in how executives assess political risk.
Additionally, as the Federal Reserve raises interest rates to combat inflation, more than three-quarters (77%) of CEOs believe that rising interest rates and restrictive monetary policy could contribute to the risk of a global recession. He answered that he thought so. Fed officials have indicated that interest rates could remain high for an extended period as inflation continues.
Recent political tensions have also caused more investors to feel stressed about politics, with just over half (52%) of investors surveyed by Investopedia saying politics and the 2024 presidential election will affect their portfolio performance over the next 12 months. They answered that they were concerned about the impact on Inflation was the single top concern for the election, with 59% of respondents saying they were concerned about the impact on investment.
But in most presidential election years, the S&P 500 delivers positive returns, according to Morgan Stanley. Analysts said the index grew an average of 11% when a Democrat became president and a new Democrat was elected, but returned an average of 12.9% when a Democrat was replaced by a Republican. .
Despite concerns about political uncertainty, CEOs were slightly more optimistic about the outlook for the global economy over the next three years than in previous surveys. In September, 73% of CEOs said they were confident in the outlook for global economic growth over the next three years, compared to 71% in August 2022 and just 60% in August 2021. .
