Top execs forecast global trends

India and China have the best prospects for economic growth over the next year, according to the 461 finance and business executives from around the world who participated in a recent RBC Capital Markets survey.

Seventy-seven percent of respondents expect India’s growth in 2011 to exceed last year’s rate; 76% expect the same for China. Fifty percent said Russia and Africa have better prospects for 2011, while only 25% think Japan’s prospects are better.

Respondents were bearish about the United States: 65% expect the U.S. economy’s 2011 growth rate to be lower than the previous decade’s annualized rate of 2.7%.

Forty percent of Canadian respondents said Canada’s growth in 2011 would surpass its average growth over the past decade. Thirty-three percent said growth in Canada would slow, and the rest expect it to stay the same.

When asked which regions are facing slower growth this year, 32% said Europe, while 28% identify North America and 28% cite Japan.

Worries over sovereign debt and a desire for yield are pushing investors into emerging markets. Nearly three-quarters – 73% – are calling for valuations to be higher in the major Asian equity markets over the next year. About two-thirds of executives surveyed see the price of oil and the value of the renminbi increasing over the next year. Most respondents expect the euro, the dollar and U.S. treasuries to weaken.

“In 2010, we saw emerging markets drive better-than-expected global growth, and there are clear expectations for that trajectory to continue,” said Marc Harris, co-head, Global Research, RBC Capital Markets.

“We are likely to see not only a continued split between developing and developed nations, but also splits within developed regions, such as the U.S. and Europe, where the recovering U.S. economy and sovereign debt crisis in the European Union are driving the implementation of different policies,” he adds.

The survey also suggests a changing landscape for global currencies. While 80% of executives polled said they expect the U.S dollar to remain the dominant global currency over the next three years, only 53% think the greenback will be dominant in five years. Only 4% of executives believe the renminbi will be the dominant global currency in three years, but 13% said it will be in five years. An overwhelming majority – 73% – think it possible that oil will be priced in a currency other than dollars within three years.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.