New research into global business confidence by MSI Global Alliance, a leading international association of professional service firms, has revealed how comparatively low levels of confidence in the developed economies of North America and Europe do not augur well for global economic prospects.

According to the MSI Global Feelgood Index, which uses weighted averages of seven key business performance indicators, the balance of confidence is finely balanced at the global level (+0.08). It is barely positive in North America (+0.04) with Western Europe even more downbeat (-0.02). Sentiment remains particularly negative around the prospects for spending on investment capital in the United States (-0.07) and in the United Kingdom (-0.23).

However, the opposite is true in the majority of developing economic regions, with business confidence remaining significantly positive in the Middle East (+0.33), Latin America (+0.27), and Southern Africa (+0.22). Confidence is also positive, but only marginally so, in the Australia and New Zealand region (+0.03) and perhaps unexpectedly, confidence in the Indian Region (including Pakistan and Bangladesh) is even lower (-0.28) than in the USA. Levels of confidence in the prospects for spending on investment capital are noticeably higher in Mexico (+0.33) and in Malaysia (+0.5).

“After months of low confidence in the global economy, the balanced outlook is encouraging, and we can now hope that this position will eventually turn into a positive one in the very near future,” commented Dr Jean-Philippe Chetcuti, managing partner at Chetcuti Cauchi, MSI’s member firm for Malta.

Joe Nellis, Professor of International Management Economics at Cranfield School of Management, a leading international business school based in the UK, comments: “Looking ahead, world economic growth is expected to slow down from just over five per cent in 2010 to around four per cent in 2011 and in 2012. According to the IMF, developed economies as a whole are likely to achieve only modest growth of 1.5 to two per cent at best, while emerging and developing markets will still record solid figures of at least six per cent over the next year. This optimism is shared by participants in the first issue of the MSI Global Feelgood Index.

“The world is facing a two-speed recovery path in the coming years. In the absence of clear and substantial policy co-ordination by governments, the developed economies are in danger of facing a ‘Lost Decade’ as experienced by Japan in the last decade(s). This will be in sharp contrast to the outlook for the emerging and developing countries. The world is on the brink of a major paradigm shift in terms of the balance of economic and political influence.”

James Mendelssohn, Chief Executive of MSI Global Alliance, comments: “The Global Feelgood Index provides a fascinating insight into the balance of confidence in 105 countries worldwide. Going forward, it will provide companies with a benchmark they can refer to on a quarterly basis when looking at prospects for the global economy.”