New PwC’s CEO Survey Has the Most Pessimistic Outlook in Over a Decade

Nearly three-quarters (73%) of CEOs believe global economic growth will decline over the next 12 months, according to PwC’s 26th Annual Global CEO Survey. The survey polled 4,410 CEOs in 105 countries and territories in October and November 2022. The bleak CEO outlook is the most pessimistic CEOs have been regarding global economic growth since we began asking this question 12 years ago and is a significant departure from the optimistic outlooks of 2021 and 2022 when more than three-quarters (76% and 77%, respectively) thought economic growth would improve.

In addition to a challenging environment, nearly 40% of CEOs think their organizations will not be economically viable in a decade if they continue on their current path. The pattern is consistent across a range of sectors, including telecommunications (46%), manufacturing (43%), healthcare (42%), and technology (41%). CEO confidence in their own company’s growth prospects also declined dramatically since last year (-26%), the biggest drop since the 2008-2009 financial crisis when a 58% decline was recorded.

Globally, business confidence around economic growth varies starkly, with G7 economies, including France (70% v 63%), Germany (94% v 82%), and the United Kingdom (84% v 71%) - all weighed down by an ongoing energy crisis - more pessimistic about their domestic growth prospects than they are about global growth. CEOs are also seeing multiple direct challenges to profitability within their own industries over the next 10 years. More than half (56%) believe changing customer demand/preferences will impact profitability, followed by changes in regulation (53%), labor/skills shortages (52%), and technology disruptions (49%).

While cyber and health risks were the top concerns a year ago, the impact of the economic downturn is top-of-mind for CEOs this year, with inflation (40%) and macroeconomic volatility (31%) leading the risks weighing on CEOs in the short-term - the next 12 months - and over the next five years. Close behind, 25% of CEOs also feel financially exposed to geopolitical conflict risks, whereas cyber risks (20%) and climate change (14%) have fallen in relative terms.

The war in Ukraine and growing concern about geopolitical flashpoints in other parts of the world have caused CEOs to rethink aspects of their business models, with almost half of the respondents that are exposed to geopolitical conflict integrating a wider range of disruptions into scenario planning and corporate operating models either by increasing investments in cybersecurity or data privacy (48%), adjusting supply chains (46%), re-evaluating market presence or expanding into new markets (46%), or diversifying their product/service offering (41%).

In response to the current economic climate, CEOs are looking to cut costs and spur revenue growth. 52% of CEOs report reducing operating costs, while 51% report raising prices and 48% diversifying product and service offerings. However, more than half - 60% - say they do not plan to reduce the size of their workforce in the next 12 months. A vast majority - 80% - indicate they do not plan to reduce staff remuneration in order to retain talent and mitigate workforce attrition rates.

While climate risk did not feature as prominently as a short-term risk over the next 12 months relative to other global risks, CEOs still see climate risk impacting their cost profiles (50%), supply chains (42%), and physical assets (24%) from a moderate to a very large extent. CEOs in China feel particularly exposed, with 65% seeing the potential for impacting their cost profiles, 71% to supply chains, and 56% to physical assets.