March 2025 Economic Outlook
In a significant shift from previous assessments, executives surveyed in March 2025 now identify geopolitical instability as the principal concern regarding company growth for the coming year. This marks the first instance since March 2022 that geopolitical factors have taken precedence over other business risks, such as weak demand, which has now fallen to the second position in the latest McKinsey Global Survey.
While there remains a tendency among private sector leaders to anticipate improvements, the proportion of those expecting increases in profits and demand has reached a low not seen in several years. Current data indicates both workforce levels and pricing strategies are stabilizing, with only 41 percent of companies reporting price hikes in the past six months. This figure represents the lowest level since the initiation of this question in September 2022.
Workforce Projections
Survey respondents exhibit a notable hesitance regarding workforce expansion, with nearly 46 percent predicting no changes in headcounts over the next six months. The outlook is increasingly cautious, as the percentage of executives intending to increase their workforce has dwindled to 28 percent, the lowest since June 2020. Universal trends show that expectations for workforce growth have diminished across all industry sectors compared to the previous quarter.
Profit Expectations
In terms of profitability, over half (55 percent) of the executives believe their companies will experience profit growth within the next six months. However, this anticipation marks the lowest sentiment registered since September 2022. Though those in the consumer goods, retail, energy, and materials sectors maintain a more optimistic view, professionals in business, legal, and related services demonstrate less confidence than they did at the end of 2024.
Demand Insights
Regarding demand for products and services, only 46 percent of surveyed executives foresee an uptick in demand over the next six months—again, the smallest proportion since mid-2020. Notably, the sentiment has shifted, with respondents from consumer goods and retail now expressing greater pessimism compared to other sectors, indicating an evolving landscape of consumer behavior and market dynamics.
Conclusion
The findings from March 2025 reflect a complex interplay of geopolitical concerns and domestic economic factors that executives must navigate. Although there remains a cautious expectation for profit and demand growth, the overall sentiment underscores the need for businesses to adapt to an unpredictable global environment.
