Executive Perspective: Yearly Review and 2013 Future Gazing – Treasurers See Slow Growth

Let’s briefly review the salient points of the past year. In regards to the financial crisis in the US and Europe I said at the start of 2012: “It will take a lot longer to resolve these issues ranging from the US housing crisis, to the European sovereign debt crisis, to America’s very own government debt issues.” Well that certainly has proven to be the case, but then again it didn’t take a rocket scientist to forecast it.

My other predictions for the year were that the US economy, and especially American businesses, are not only doing okay but have a bright future “if we do certain things”, which meant implementing “certain policies that will encourage investments in entrepreneurs, in education at all levels, and protect our intellectual capital around the world.” On this point I would sadly have to say that the US has made very little progress.

US Perspective

So now where does that leave us for 2013? Well, I asked that question of a recent gathering of the Association for Financial Professionals’ (AFP) Corporate Treasurers Council (CTC) meeting in Atlanta, and got a mixed response with some positive growth predictions and other treasurers admitting to being more wary. The responses at the last CTC roundtable meeting of the year came just a day after the US Federal Reserve (Fed) concluded its final Federal Open Market Committee (FOMC) of the year where it increased its US bond purchasing programme. This should assist stability and growth, according to the majority of CTC attendees, which included treasurers from 10 different companies that, amongst others, included a global packaging/logistics firm, a trucking business, a card payments processor, insurance and investment companies, commercial real estate firms and a global wire maker.

As I do at the end of every year, I asked the AFP’s CTC attendees for their outlook for 2013 and beyond. The most often-used comment and one espoused in the AFP 2013 Business Outlook Survey’ was: “Cautiously optimistic”. Admittedly not exactly a wildly enthusiastic or inspiring response, therefore, but a solid enough assessment of what lies in store during 2013.

European Outlook

Despite the caution most companies are actually seeing an improvement in Europe, especially in central and eastern regions of the continent. One CTC treasurer even said that the economy and business was definitely better than how the media portrayed it. And several companies had undertaken fairly extensive research over the past year into the possibilities of a eurozone breakup, or at least a departure by some members, and had not been too frightened by the results. All of the businesses came to the same conclusion, which was that an exit was not going to happen – not even for Greece.

There was some expectation that the eurozone would hold together, therefore, and that the debt crisis would work its way through, even if for some countries that meant some tough times ahead for longer term gains.

In regard to US growth prospects, not everyone on the CTC was so optimistic about this side of the Atlantic, especially for the first half of the year, but things are expected to pick up – mirroring almost exactly the findings of the survey. The caution was tempered by those who have been seeing improvements in construction, trucking and commercial real estate business, so 2013 does have some bright spots.

Global Viewpoint

Further bright spots are evident if you look at the global gross domestic product (GDP) forecasts, particularly China where it is predicted that GDP growth will improve from 7.5% this year to 8.5% in 2013. Other emerging markets are also offering growth opportunities to multinational corporations (MNCs).

So, it is a mixed bag for 2013, but if the US can get past the ‘fiscal cliff’ and then the debt ceiling problem (remember that debacle from August 2011 when the credit ratings agencies hammered Washington for its dithering and deadlock?) then the global economy should continue to improve, aided further by an improvement in US unemployment rates.

Asia looks as if it will continue its growth path, and judging by what we heard in Atlanta at the CTC, perhaps Europe too can make further progress. Even though predictions for 2012 were fairly dire, the US equity markets still performed well, so maybe with an even better outlook for next year, especially in the second half, we can expect even better times. For the longer term in the US, we have to break the political gridlock in Washington and do what I said last year and at the beginning of this article: make long-lasting investments to ensure our future growth and prosperity. That means supporting entrepreneurs, education and intellectual capital rights.

  • The author, Craig Martin, is the Association for Financial Professionals (AFP) treasury practice lead and executive director of the AFP Corporate Treasurers Council (CTC).