Smiles and frowns

New Delhi, July 29 (PTI): A recent McKinsey study showed that Indian executives were the most optimistic in the world in terms of expectations for growth in economy, their industries and improvement in inflation levels.

Most executives in the world, except those in North America, expect economic conditions to improve in the next six months. Indians come on the top with 81 per cent expressing a positive outlook.

There are robust economic growth projections despite a growing threat from inflation all over the world, the study said.

In India, the latest government data showed the rate of inflation rising to 4.41 per cent in the week ended July 14 after remaining unchanged for two weeks.

While fuel prices in the country were steady in the latest reported period, the McKinsey study found that nearly two-third of executives all over the world saw oil and gas costs as the biggest driver of inflation.

Indian executives were the most optimistic about decline in inflation over the next six months. Most Chinese executives expected the rate of inflation to rise from its current level. Thirty-nine per cent of the Indian executives expected inflation to decline, while 36 per cent saw it rising in the next six months.

In comparison, 75 per cent of the Chinese executives saw inflation rising against only 7 per cent expecting a fall. In North America, 59 per cent of the respondents anticipated a rise and 10 per cent saw a decline in the future. In Asia-Pacific, 67 per cent anticipate higher inflation and 50 per cent of the European executives see a rise.

The prospect of higher inflation is prevalent in regions where the overall economic outlook has become more positive in the last quarter, McKinsey said.

Chinese respondents, for instance, were not optimistic about inflation with 75 per cent feeling it would go up in the next couple of months. In India and the Latin American countries, less than 45 per cent expected a higher inflation.

“These findings are particularly surprising — in India because the rupee has been appreciating steadily against the dollar and in Latin America because of the region’s historically high rates of inflation,” the study said.