Fighting in Ukraine, Iraq mars CFOs’ otherwise rising optimism

Many CFOs worldwide still feel good about business prospects and are willing to take on bigger risks to pursue growth opportunities, according to a poll Deloitte conducted during the second quarter in 11 countries and regions.

“From a CFO’s perspective, conditions have been consistently favourable in many of the countries reporting, with the US being the sweet spot,” Ira Kalish, Deloitte’s chief global economist, said in the report of the survey results. “Businesses have been looking at the positives and taking advantage while they can.”

Risk appetites have come down a little from a six-and-a-half-year high in the UK and a four-year high in Australia in the first quarter, but CFOs’ optimism remains high in many countries.

In Southeast Asia, where more than three-fourths of polled companies met or exceeded performance goals in the past three years, 48% of CFOs were more optimistic in the second quarter than they were three months earlier, up 4% from six months earlier. In North America, CFOs’ expectations for year-over-year earnings, capital spending, and domestic hiring reached the highest level in a year. And Irish CFOs have not been more optimistic about their companies’ financial prospects since the survey launched in 2009.

But political and regulatory uncertainties worry CFOs in some countries, such as Chile, the UK, and Australia.

Many uncertainties are local in nature, brought on by upcoming elections, an increase in the value of the national currency, or fallout from tax reforms, according to Kalish. But the conflict between Russia and Ukraine and the escalating violence and fighting in Iraq also raise global concerns, especially in CFOs’ long-term outlooks.

Among the worries, by continent:

Australia. The possibility of a federal budget crisis and the rising strength of the Australian dollar dampened optimism amongst CFOs – a net of only 6% were more optimistic about their company’s financial prospects, down from 36% in the first quarter.

Europe. Uncertainties over national tax reforms and Russian sanctions worried Austrian CFOs participating in the survey. Only 22% expected economic growth, down from 46% in the first quarter, and they were nearly as pessimistic about their companies’ prospects. Geopolitical risks are also a concern amongst Swiss CFOs (72% of respondents). Optimism amongst British CFOs also dipped to 35%, from 38% in the first quarter – but mainly due to concerns over the possibility of a referendum on EU membership.

South America. Reforms that will change how businesses manage their taxes in Chile lowered CFOs optimism about their companies’ performance (32%, down from 61% a year ago). Sixty-four per cent of the CFOs in Chile participating in the survey said they would focus on cost reduction rather than growth in the next year.

North America. CFOs remain pessimistic about the European economy and have considerably lowered their growth expectations for markets in China. Only 7% of them viewed Europe’s economy as good, the same as in the first quarter – a sentiment flavoured by the ongoing conflict between Russia and Ukraine. About one-quarter considered the Chinese economy good, a new survey low and down from 37% in the first quarter.

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Sabine Vollmer ( is a CGMA Magazine senior editor.