DAVOS, Switzerland, Jan 23 (Bernama-GLOBE NEWSWIRE) -- A
record-breaking share of CEOs are optimistic about the economic
environment worldwide, at least in the short term. That’s one of the key
findings of PwC’s 21
st survey of almost 1,300 CEOs around the world, launched today at the World Economic Forum Annual Meeting in Davos.
Fifty
seven percent of business leaders say they believe global economic
growth will improve in the next 12 months. It’s almost twice the level
of last year (29%) and the largest ever increase since PwC began asking
about global growth in 2012.
Optimism in global growth has more
than doubled in the US (59%) after a period of uncertainty surrounding
the election (2017: 24%). Brazil also saw a large increase in the share
of CEOs who are optimistic global growth will improve (+38% to 80%). And
even among the less optimistic countries such as Japan (2018: 38% vs.
2017: 11%) and the UK (2018: 36% vs. 2017: 17%), optimism in global
growth has more than doubled since last year.
“CEOs’ optimism in
the global economy is driven by the economic indicators being so strong.
With the stock markets booming and GDP predicted to grow in most major
markets around the world, it’s no surprise CEOs are so bullish,”
comments Bob Moritz, Global Chairman, PwC.
Confidence in short-term revenue growth on the riseThis
optimism in the economy is feeding into CEOs’ confidence about their
own companies’ outlook, even if the uptick is not so large. 42% percent
of CEOs said they are “very confident” in their own organisation’s
growth prospects over the next 12 months, up from 38% last year.
Looking
at the results by country, it’s a mixed bag. CEOs’ outlook improved in
several key markets including in Australia (up 4% to 46%) and China (up
4% to 40%), where the share of CEOs saying they are “very confident” in
their own organisation’s 12-month growth prospects rose.
In the
US, CEOs’ confidence has recovered. After election nerves last year, the
early focus on regulation and tax reform by the new administration has
seen confidence in business growth prospects for the year ahead rising
significantly – from 39% in 2017 to 52% in 2018. And North America is
the only region where a majority of CEOs are “very confident” about
their own 12-month prospects.
In the UK, with Brexit negotiations
only recently reaching a significant milestone, business leaders’ drop
in short-term confidence is unsurprising (2018: 34% vs. 2017: 41%).
The
top three most confident sectors for their own 12-month prospects this
year are Technology (48% “very confident”), Business Services (46%) and
Pharmaceutical and Life Sciences (46%) – all exceeding the global “very
confident” level of 42%.
Strategies for growth remain largely
unchanged on last year’s survey – CEOs will rely on organic growth
(79%), cost reduction (62%), strategic alliances (49%) and M&As
(42%). There was a small increase in interest in partnering with
entrepreneurs and start-ups (33% vs 28% last year).
Top countries for growth: Confidence in US continues, reinforcing lead on ChinaCEO
confidence in the US market extends overseas, with non-US based CEOs
once again voting it the top market for growth in the next 12 months.
This year, the US reinforces its lead on China (46% US vs 33% China,
with the US lead over China up 2% compared with 2017).
Germany
(20%) remains in third place, followed by the UK (15%) in fourth place,
while India bumps Japan as the fifth most attractive market in 2018.
“Even
with high levels of global growth confidence, business leaders want and
need safe harbours for investment to secure short-term growth,”
comments Bob Moritz, Global Chairman, PwC. “Access to consumers, skills,
finance and a supportive regulatory environment are reinforcing leading
markets’ positions, for business leaders to achieve their short-term
growth targets.”
Jobs and digital skills: headcounts to increase; leaders concerned about availability of digital talentConfidence
in short-term revenue growth is feeding into jobs growth, with 54% of
CEOs planning to increase their headcount in 2018 (2017: 52%). Only 18%
of CEOs expect to reduce their headcount.
Healthcare (71%),
Technology (70%), Business Services (67%) Communications (60%) and
Hospitality and Leisure (59%) are amongst the sectors with the highest
demand for new recruits.
On digital skills specifically, over a
quarter (28%) of CEOs are extremely concerned about their availability
within the country they are based, rising to 49% extremely concerned in
South Africa, 51% in China and 59% in Brazil.
Overall, 22% of
CEOs are extremely concerned about the availability of key digital
skills in the workforce, 27% in their industry and 23% at the leadership
level.
Investments in modern working environments, learning and
development programmes and partnering with other providers are the top
strategies to help them attract and develop the digital talent they
need.
Impact of technology on employment and skillsWhile
recent research by PwC showed that workers were optimistic about
technology improving their job prospects, CEOs admit that helping
employees retrain, and increasing transparency on how automation and AI
could impact jobs is becoming a more important issue for them.
Two
thirds of CEOs believe they have a responsibility to retrain employees
whose roles are replaced by technology, chiefly amongst the Engineering
& Construction (73%), Technology (71%) and Communications (77%)
sectors. 61% of CEOs build trust with their workforce by creating
transparency, at least to some extent, on how automation and AI impact
their employees.
Bob Moritz, Global Chairman, PwC, comments:
“Our
education systems need to arm a global workforce with the right skills
to succeed. Governments, communities, and businesses need to truly
partner to match talent with opportunity, and that means pioneering new
approaches to educating students and training workers in the fields that
will matter in a technology-enabled job market. It also means
encouraging and creating opportunities for the workforce to retrain and
learn new skills throughout their careers. As the interest in
apprenticeships and internships shows, lifelong training relevant to a
business or industry is critical.”
The digital and automation
transition is particularly acute in the Financial Services sector.
Almost a quarter (24%) of Banking & Capital Markets and Insurance
CEOs plan workforce reductions, with 28% of Banking & Capital
Markets jobs likely to be lost to a large extent due to technology and
automation.
Threats to growth: CEOs fear wider societal threats they can’t controlDespite
the optimism in the global economy, anxiety is rising on a much broader
range of business, social and economic threats. CEOs are ‘extremely
concerned’ about geopolitical uncertainty (40%), cyber threats (40%),
terrorism (41%), availability of key skills (38%) and populism (35%).
These threats outpace familiar concerns about business growth prospects
such as exchange rate volatility (29%) and changing consumer behaviour
(26%).
Underlining the shift, extreme concern about terrorism
doubled (2018: 41% vs 2017: 20%) and terrorism enters the top 10 threats
to growth. The threat of over-regulation remains the top concern for
CEOs (42% extremely concerned), and over a third (36%) remain concerned
about an increasing tax burden.
Key skills availability is
the top concern for CEOs in China (2018: 64% extremely concerned vs.
2017: 52%). In the US (63%) and the UK (39%), cyber has become the top
threat for CEOs displacing over-regulation. And in Germany, cyber jumped
from being the fifth threat in 2017 to third place (28%) this year.
A
year after the Paris Agreement was signed by over 190 nations, which
saw countries commit to voluntary action on climate change and low
carbon investment, CEOs’ concern about the threat of climate change and
environmental damage to growth prospects has now doubled to 31% of CEOs
(2017: 15%).
High-profile extreme weather events and the US
withdrawal from the Paris Agreement have significantly raised the
profile of business action on climate risk, regulation and resilience.
In China, over half (54%) of business leaders are extremely concerned
about climate change and environmental damage as a threat to business
growth, equal with their levels of concern about geopolitical
uncertainty and protectionism.
“The higher level of concern is
being driven by larger societal and geopolitical shifts rather than the
dynamics of business leaders’ own markets,” comments Bob Moritz, Global
Chairman, PwC. “It’s clear their mid to long-term confidence in revenue
growth is tempered by threats the business world is not used to tackling
directly itself.”
Trust and leadership: CEOs divided over whether future economic growth will benefit the many or the fewEchoing
the theme of the World Economic Forum this year, CEOs acknowledge that
we live in a fractured world. They are divided over whether future
economic growth will benefit the many or the few. They see the world
moving towards new, multifaceted metrics to measure future prosperity.
Bob Moritz, Chairman, PwC comments:
“The
higher levels of CEO concern about broader societal threats underlines
how companies are navigating an increasingly fractured world. CEOs
across every region and country that we spoke to recognise that the old
ways of measuring growth and profit won’t work alone for the future.
Particularly in the context of the Sustainable Development Goals, we’re
likely to see more work developing and defining metrics that capture and
communicate an organisation’s purpose in a way that is relevant to
businesses’ stakeholders in the coming years.”
Examining the key
challenges to trust for businesses, CEOs admit that delivering results
in shorter periods of time (60%) is the main challenge. However,
following this, there is a significant shift with the majority reporting
higher levels of pressure to hold individual leaders to account (59%),
including for misconduct. Over a third report more pressure from
employees and customers to take political and social stances (38%) in
public.
In the Banking and Capital Market (65%), Healthcare (65%)
and Technology sectors (59%), the profile of leadership accountability
was higher than average. So too were expectations in the US (70%),
Brazil (67%), and the UK (63%). High-profile debates on diversity,
immigration, social inclusion and pay equity have raised employees’
expectations of leadership to engage in political and social issues,
particularly in the US (51%), China (41%) and the UK (38%).
EndsDownload the report at www.pwc.com/ceosurvey.Notes
