CEO Pessimism over Global Growth Reaches Record High
At the beginning of the new decade, CEOs are showing record levels of pessimism in the global economy, according to PwC. 53% are predicting a decline in the rate of economic growth in 2020. This is up from 29% in 2019 and just 5% in 2018, the highest level of pessimism since PwCe started asking this question in 2012.
By contrast, the number of CEOs projecting a rise in the rate of economic growth dropped from 42% in 2019 to only 22% in 2020. PwC’s 23rd survey included almost 1,600 CEOs from 83 countries across the world. CEO pessimism over global economic growth is particularly significant in North America, Western Europe and the Middle East, with 63%, 59% and 57% of CEOs from those regions predicting lower global growth in the year ahead.
“Given the lingering uncertainty over trade tensions, geopolitical issues and the lack of agreement on how to deal with climate change, the drop in confidence in economic growth is not surprising, even if the scale of the change in mood is,” said Bob Moritz, Chairman, PwC Network. “These challenges facing the global economy are not new, however the scale of them and the speed at which some of them are escalating is new, the key issue for leaders gathering in Davos is: how are we going to come together to tackle them.”
“On a brighter note, while there is record pessimism amongst business leaders, there are still real opportunities out there. With an agile strategy, a sharp focus on the changing expectations of stakeholders, and the experience many have built up over the last ten years in a challenging environment, business leaders can weather an economic downturn and continue to thrive,” Moritz said.
CEOs are also not so positive about their own companies’ prospects for the year ahead, with only 27% 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% 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.
Ongoing trade conflicts and political tensions have seriously dented the attractiveness of the US for China CEOs. In 2018, 59% of China CEOs selected the US as one of their top three growth markets, in 2020 this has dropped dramatically to just 11%. The US loss has been Australia’s gain, with 45% of China CEOs now looking to Australia as a top three key growth market compared with only 9% two years ago.
CEOs are also increasingly concerned about cyber threats and climate change and environmental damage. 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 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 (51%) 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% saying it does strike the right balance and 43% saying it doesn’t.
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. Only 18% of CEOs say they have made “significant progress” in establishing an upskilling programme.