CFOs Forecast to American Express: Investment in Emerging Markets to Heat Up, Developed Economies Likely to Remain Cool

  CFOs Forecast to American Express: Investment in Emerging Markets to Heat
  Up, Developed Economies Likely to Remain Cool

        U.S. CFOs Across Multiple Industries Cite Regulatory Concerns;

Latin American and Asian Countries Expect Greatest Increases in Spend & Growth

Business Wire

NEW YORK -- June 6, 2013

While global economic conditions remain a concern, senior financial executives
in emerging markets^1 see the most robust opportunities for growth over the
next 12 months. According to recent research from American Express Company
(NYSE: AXP) and CFO Research, on average, 76 percent of senior finance
executives in emerging markets predict economic expansion in their respective
countries. Meanwhile, in the U.S., increased regulation and additional
compliance requirements hamper projections for growth from CFOs in a range of
industries. Similar caution also appears in select European markets such as
Spain and France, however the continuing prolonged recessions are the
underlying factors driving these sentiments in these countries.

These were among the findings released today in the sixth annual American
Express/CFO Research Global Business and Spending Monitor, a random sampling
of senior finance executives in the U.S., Europe, Canada, Latin America, Asia
and Australia.

“After years of global economic uncertainty, companies in emerging markets are
clearly poised to take advantage of market opportunities and drive growth,”
said Shane Berry, Senior Vice President, Global Corporate Payments – Global
Client Group, American Express. “That’s not to say that mature economies
aren’t also looking to increase investments, but recent history has made them
much more cautious.”

U.S. Optimism is High, Investments Dampened by Regulatory Concerns

While the majority of respondents in the U.S. (71 percent) are generally
optimistic about economic growth over the coming year, they are restrained in
their approach to spending and investment. Only 17 percent of respondents
based in the U.S. say they are likely to increase real spending and investment
substantially over the next year – the least of any country surveyed. U.S.
finance executives are also among the most likely to employ tight spending
controls, second only to France (41 percent and 48 percent respectively).

U.S. CFOs say that lingering concerns over new regulation and the costs
associated with compliance are having a direct impact on their spending plans,
regardless of the industry they work in. Looking at a wide spectrum of
industries in the U.S. – from accounting and real estate to food and beverage
– 30 percent of all respondents expect a substantial increase in the total
cost of compliance with laws being developed. In addition, 45 percent of
respondents believe that the total cost of complying with government
regulation has already increased substantially over the past five years.

Where You Stand Depends on Where You Work

While regulations and political gridlock weigh on U.S. CFOs, it’s the
prolonged economic recession that’s hampering enthusiasm in other developed
markets. Of those surveyed, Spain and France have the lowest expectations for
economic growth at 43 percent and 39 percent, respectively. In fact, the
European malaise appears to be impacting Russia, which is considered an
emerging market, yet tracks more closely to its geographic neighbors, likely
due to economic ties with euro zone members. Rather than sharing the optimism
of their fellow emerging economies, just 39 percent of those executives
predict growth for Russia.

In fact, several of the other emerging markets surveyed reported exuberant
expectations for economic growth:

  *100 percent of respondents in Brazil;
  *94 percent of respondents in China;
  *81 percent of respondents in Mexico; and,
  *78 percent of respondents in India.

The 100 percent consensus for growth in Brazil is remarkable. However, perhaps
due to recent concerns about inflation and lagging production, Brazilian
executives appear to be adjusting planning horizons. The majority (81 percent)
says they are likely to shorten their planning cycles in response to increased
market volatility.

This bullish view of growth trends is also reflected in respondents’ plans for
investments. Emerging market CFOs tend to say they’ll increase spend and
investment more substantially than their counterparts in developed economies.
In fact, emerging economy respondents are among the least likely to place
tight controls on their spending plans. For example, only 3 percent of
respondents in China plan to follow that course.

Latin American and Asian Countries More Aggressive on Investment

Just as Russian respondents tend to reflect the caution expressed throughout
Europe, few Chinese respondents have plans to maintain tight spending
controls, reflecting the overall enthusiasm found in Asian and Latin American
countries. Respondents based in India, Argentina, Brazil and China are among
the most likely to say they plan to substantially increase spending and
investment over the next year, with India and Argentina leading the way at 75
percent.

Expanding market access (such as expansion into new geographies or lines of
business) topped the list of key investment areas where respondents expect
their companies will invest more than in the previous year. Among all
countries surveyed, 54 percent of respondents plan to spend more on market
access in 2013. Other areas of investment include:

  *48 percent for improving production-process efficiency;
  *46 percent for new product development;
  *44 percent for administrative process efficiency; and,
  *40 percent for new production capacity.

“We’re seeing a blend of overall optimism regarding the economy off-set by
short-term local concerns, translating into different planning horizons for
different markets,” said Berry. “There’s a new normal emerging in the global
marketplace where CFOs will demand value from both investments and existing
processes, creating a value economy for growth.”

Selected Highlights

Spending and Investment Increases

Most Likely to Substantially Increase Spending and Investment
Countries                                   Percentage
Argentina and India                         75%
Brazil and China                            71%
Mexico                                      57%
Least Likely to Substantially Increase Spending and Investment
Countries                                   Percentage
Canada                                      31%
France                                      22%
United States                               17%
                                      


Economic Optimism by Country

Most Optimistic about Economic Growth
Countries              Expecting Economic Expansion
Brazil                 100%
China and Hong Kong    94%
Mexico                 81%
Least Optimistic about Economic Growth
Countries              Expecting Economic Expansion
United Kingdom         50%
Spain                  43%
France and Russia      39%
                      


Additional U.S. Findings

U.S. CFOs Relatively Optimistic About Growth
Expect to Increase Headcount                           50%
Expect More M&A Activity Globally                      79%
Predict Economic Expansion in the U.S.                 71%
U.S. CFOs Remain Cautious about Spend
Concerned About Political Uncertainty                  50%
Do Not Plan to Expand Globally                         26%
Plan Modest or Tightly-Controlled Approach to Spend    88%
                                                      

For the full American Express/CFO Research Global Business and Spending
Monitor, visit http://about.americanexpress.com/news/.

About American Express Global Corporate Payments

American Express Corporate Payment Solutions provide the Corporate Card,
Corporate Purchasing Solutions, and other expense management services to
midsize companies and large corporations worldwide. In the U.S., American
Express is a leading issuer of commercial cards, serving more than 70 percent
of the Fortune 500, as well as tens of thousands of midsize companies. For
more information, visit americanexpress.com/corporate.

About American Express

American Express is a global services company, providing customers with access
to products, insights and experiences that enrich lives and build business
success.Learn more at americanexpress.com and connect with us on
facebook.com/americanexpress, foursquare.com/americanexpress,
linkedin.com/companies/american-express, twitter.com/americanexpress, and
youtube.com/americanexpress.

Key links to products and services: charge and credit cards, business credit
cards, travel services, gift cards, prepaid cards, merchant services, business
travel, and corporate card.

About CFO Research

CFO Research is the sponsored research group of CFO Publishing LLC, which
produces CFO magazine, CFO.com, and CFO Conferences. CFO Publishing, a
portfolio company of Seguin Partners, is the leading business-to-business
media brand focused on the information needs of senior finance executives. CFO
Publishing has long-standing relationships with more than 500,000 finance
executives.

^1 Emerging markets included in this survey are: Argentina, Brazil, Mexico,
Russia, China and India.

Contact:

kwittken + co.
Glorimar Perez, 646-747-0096
gperez@kwitco.com
or
American Express
Christine Elliott, 212-640-0622
Christine.S.Elliott@aexp.com
 
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