In the Asia-Pacific region's developed nations, such as Japan and South Korea, executives are losing confidence in the short-term economic prospects of their respective countries and industries. The latest McKinsey Quarterly survey of global executives found that respondents from this region are the least confident about the economic prospects of their countries during the next six months and have lost the most confidence overall since January 2004. Several of these nations face slowing growth, as well as increasing competition from both China and India.

In general, the more than 9,300 businesspeople from 130 countries who participated in the Quarterly survey have a positive view of the economic prospects of their countries and industries, but a significantly less positive view than they had a year ago. Indeed, global confidence has fallen by 11 percent since our first survey, in January 2004. This slide is consistent with a recent World Bank report concluding that the global recovery has peaked.

Confidence by region and industry

Executives in India are the most confident about their prospects: 80 percent say their country's economy is better than it was six months ago, and the same proportion believes it will improve further in the next six months; 74 percent also expect conditions in their own industry to improve in that time. These executives see consumer products, high tech, and telecommunications as the industries with the most growth potential during the next five years. Indian business leaders are focused largely on domestic growth and see the United States as their most important external market, despite the current talk of stronger commercial relations with China.

Executives in developing economies, although a little less hopeful than they were in January 2004, are now the most upbeat respondents in our sample about the prospects for both their economies and their industries. This optimism is supported by a recent report from the Asian Development Bank, which predicts that Asia's emerging economies will enjoy robust growth into 2007 on the back of strong domestic demand, regional trade, and a steady influx of investment.

IT and telecom executives, continuing a trend that follows several years of hard times, are a bit more likely than the others to expect their industries to improve in the next six months. Consumer products executives, on the other hand, have seen the least improvement in the past six months and aren't much more hopeful about the months ahead.

Hiring plans

A plurality of executives expect the workforce of their companies to remain stable over the next six months (Exhibit 3); of those planning a change, however, more than twice as many will hire workers than will shed them. New jobs will be most scarce in heavy industry, but nearly half of the IT and telecom executives plan to expand the workforce-not surprising given their optimism. Those new telecom jobs will be concentrated in India and North America; in all other regions, the business services industry, whose executives are also quite confident, will probably experience the most job growth. By region, executives in India are the most likely to hire more employees, with nearly two-thirds saying they have such plans. In addition, "C-level" executives are significantly more likely to increase the workforce-and far less likely to say they plan to cut it-than are other executives.