CEOs see sluggish US economic growth

  • Business
  • Friday, 21 Feb 2003

MIAMI: The chief executives of top US companies see the American economy growing in 2003 at the same anaemic pace as last year, with business activity possibly picking up if global tensions and Iraq war fears ease. 

The latest survey by the Business Council, a group of blue-chip corporate leaders, found the executives generally cautious about capital spending, which is widely seen as vital to getting the US economy on a solid footing. 

“The vast majority of CEOs expect real GDP (gross domestic product) growth to be roughly similar to last year’s 2.4% pace, with 72% saying that growth will be moderate in 2003 (1.6% to 3%),” the council said in a summary of the survey of 180 active and former chief executives. 

The CEOs trail the views of economists, who have said the threat of a war in Iraq is weighing on the US economy. According to a survey report issued last week by Blue Chip Economic Indicators, leading economists have trimmed their projections of 2003 expansion to 2.7% from 2.8% a month earlier. 

The corporate chiefs said a resolution of world tensions over a possible invasion of Iraq would help US economic growth. Some 40% said worries about an Iraqi war or terrorism had caused a delay or change in their business plans for 2003. 

The CEOs on the whole expected mild inflation throughout 2003, interest rates at or slightly above their current 40-year lows and a continued slide in the value of the US dollar. Only a small number predicted either a recession or a big surge in economic growth. 

The executives said government would likely be the fastest growing part of the economy in 2003, with consumer spending and housing also expanding.  

But the executives from the finance, construction, consumer products, technology retailing and other industries meeting privately at the Boca Raton Resort and Club in south Florida remained cautious about stepping up their own capital spending. 

Some 43% of them had no plan to increase investments in plant and equipment, with the rest nearly equally divided between increasing and slowing such spending.  

Only 9% of the executives expected to step up hiring this year, 46% saw no change, while 45% predicted a lower rate of hiring. – Reuters  

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