Compared to Q1, a higher proportion of CFOs in Q2 view current economic conditions as good across four of the five regions tracked by Deloitte’s CFO Signals. The exception is North America, with CFOs’ sentiment falling measurably. Looking a year out, CFOs have lower expectations for economic conditions to improve across all five regions. They also express lower net optimism than in the prior quarter for their own companies.

In North America, 34% of CFOs rate current economic conditions as good or very good, down from 40% in Q1. The identical percentage also expects conditions to improve in a year, down significantly from 54% in the prior quarter. In Europe, 8% of CFOs view current economic conditions as good or very good, up slightly from 5% in Q1, while 15% expect improvement 12 months out, less than half the 32% of CFOs who expressed that sentiment in Q1.

In China, some 17% of CFOs consider current economic conditions as good, up more than double the 6% of CFOs who held that view in Q1. Meanwhile, 30% of CFOs expect better conditions in a year, a decrease from 41% in Q1. Looking at Asia excluding China, more than one-quarter (28%) of CFOs view the current economy as good or very good, up from 22% in Q1, while 27% of CFOs expect better conditions a year out, a decrease from the prior quarter’s 32%. In South America, 8% of CFOs consider current economic conditions good, up slightly from 6% in Q1, and 7% of CFOs expect a better economy in 12 months, down from 17% on the previous quarter.

CFOs’ own-company net optimism (the percentage of CFOs citing rising optimism for their companies’ prospects minus the percentage citing falling optimism) was +6, down from +13 in Q1. The performance index (average of percentages of CFOs citing positive year-over-year (YOY) revenue and earnings growth) slightly increased to +75 from +71 from the previous quarter. The expansion index (average of percentages of CFOs citing positive YOY growth in capital investment and domestic hiring) declined to +54 from +62 in Q1.

Only 16% of surveyed CFOs consider debt financing attractive in this quarter’s survey, a slight increase from 15% in the prior quarter, but still among the lowest levels since CFO Signals began tracking CFOs’ views on this topic in 2014. Nearly one-quarter of CFOs (24%) find equity financing attractive, up from 16% in Q1 and slightly higher than in Q2 2022 and Q2 2020. CFOs’ views may be taking into consideration inflation, higher interest rates, and overall macroeconomic uncertainty.

Nearly one-third (33%) of surveyed CFOs say now is a good time to take greater risks, a decline from 40% in the previous quarter and below the two-year average of 43%. The decrease in some CFOs’ risk appetite could reflect their reluctance to take on new risks amid continued high inflation, rising interest rates, market uncertainty, and geopolitical instability. Interestingly, the results for this quarter are slightly above what they were in Q2 2020 during the pandemic.

81% of CFOs put economic/financial market risks at the top of their organisations’ most worrisome external risks. Geopolitical risks followed, indicated by just over half (57%) of CFOs.