WPP WPP PLC

By Jason Chow

Companies are sitting on large cash piles and are more interested in lower costs and merger and acquisitions than in capital investments because of economic and geopolitical uncertainty, Martin Sorrell, chief executive at media and marketing firm WPP PLC, said Wednesday.

"Legacy firms focus on cutting costs," he said at a panel discussion at the World Economic Forum at Davos. "The standard firm is unwilling to make investments."

The gloomy mood comes just one day after the International Monetary Fund cut its forecast for global economic growth to 3.4% as the ongoing rout in commodity markets weighs on the world, especially on emerging markets.

Zhu Min, deputy managing director at the IMF, said at a panel titled "Preventing Future Shocks" that the growth potential of the global economy is shrinking.

"Where does the growth come from? Structural reform," he said. "We don't have aggregate demand," he added, but said policymakers could unleash latent demand by redesigning pensions, tax regimes, and rewriting regulation, for example.

Hedge fund manager Paul Singer said the long-term growth could return if there were "a better mix of policies."

Write to Jason Chow at Jason.Chow@wsj.com

(END) Dow Jones Newswires

January 20, 2016 06:51 ET (11:51 GMT)

WPP (NYSE:WPP)
Historical Stock Chart
From Mar 2024 to Apr 2024

WPP (NYSE:WPP)
Historical Stock Chart
From Apr 2023 to Apr 2024