CEOs predict slower economic growth in every region across the world,
As we enter a new decade, CEOs are showing record levels of pessimism in the global economy, with 53 per cent predicting a decline in the rate of economic growth in 2020. This is up from 29 per cent in 2019 and just five per cent in 2018 – the highest level of pessimism since we started asking this question in 2012.
By contrast, the number of CEOs projecting a rise in the rate of economic growth dropped from 42 per cent in 2019 to only 22 per cent in 2020. These are some of the key findings of PwC’s 23rd survey of almost 1,600 CEOs from 83 countries across the world, launched at the World Economic Forum annual meeting in Davos, Switzerland this week.
CEOs are also not so positive about their own companies’ prospects for the year ahead, with only 27 per cent of CEOs saying they are “very confident” in their own organisation’s growth over the next 12 months – the lowest level we have seen since 2009 and down from 35 per cent last year.
When asked about their own revenue growth prospects, the change in CEO sentiment has proven to be an excellent predictor of global economic growth. Analysing CEO forecasts since 2008, the correlation between CEO confidence in their 12-month revenue growth and the actual growth achieved by the global economy has been very close. If the analysis continues to hold, global growth could slow to 2.4 per cent in 2020 below many estimates including the 3.4 per cent October growth prediction from the IMF.
In 2019 when asked about the top threats to their organisation’s growth prospects, uncertain economic growth ranked outside the top ten concerns for CEOs at number twelve. This year it has leapt to third place, just behind trade conflicts – another risk that has risen up the CEOs agenda – and the perennial over-regulation, which has again topped the table as the number one threat for CEOs.
CEOs are also increasingly concerned about cyber threats and climate change and environmental damage, however despite the increasing number of extreme weather events and the intensity of debate on the issue, the magnitude of other threats continues to overshadow climate change which still does not make it into the CEOs’ top ten threats to growth.
Policing cyberspace
While CEOs around the world express clear concerns about the threat of over-regulation, they are also predicting significant regulatory changes in the technology sector. Globally over two-thirds of CEOs believe that governments will introduce new legislation to regulate the content on both the internet and social media and to break up dominant tech companies. A majority of CEOs (51 per cent) also predict that governments will increasingly compel the private sector to financially compensate individuals for the personal data that they collect.
However, CEOs are in two minds as to whether governments are striking the right balance in designing privacy regulation between increasing consumer trust and maintaining business competitiveness, with 41 per cent saying it does strike the right balance and 43 per cent saying it doesn’t.
The upskilling challenge
While the shortage of key skills remains a top threat to growth for CEOs and they agree that retraining/upskilling is the best way to close the skills gap, they are not making much headway in tackling the problem with only 18 per cent of CEOs saying they have made “significant progress” in establishing an upskilling programme.
Climate change
Although climate change does not appear in the top ten threats to CEOs’ growth prospects, CEOs are expressing a growing appreciation of the upside of taking action to reduce their carbon footprint. Compared to a decade ago, when we last asked this question, CEOs are now twice as likely to “strongly agree” that investing in climate change initiatives will boost reputational advantage (30 per cent in 2020 compared with 16 per cent in 2010) and 25 per cent of CEOs today compared with 13 per cent in 2010 see climate change initiatives leading to new product and service opportunities for their organisation.
The views of CEOs in Cyprus
As part of its global survey, PwC Cyprus will present its local survey for Cyprus for the ninth consecutive year. A record number of 115 CEOs from Cyprus participated in the study, reflecting the business community’s growing interest in the survey. The local survey will be presented at a special event in early March.
Download the report at ceosurvey.pwc. Video footage from the launch of the Global CEO Survey in Davos and other media materials are available at: press.pwc.com
For more information contact Konstantina Logotheti (+357-22555108) email: [email protected] or Myria Pitta (+357-22555103) email: [email protected], Marketing & Communications, PwC Cyprus
