Global CEOs less optimistic, says PwC survey for Davos

21 January 2015 Consultancy.uk

Fewer CEOs than last year think global economic growth will improve over the next 12 months, though confidence in their ability to achieve revenue growth in their own companies remains stable, concludes PwC in the 2015 edition of its ‘Annual Global CEO Survey’.

For the 18th year in a row accounting and consulting giant PwC has conducted research into the key themes and focus area for CEOs. This year more than 1,300 CEOs were interviewed in 77 countries, across all major economies. The results, which have been compiled by R2i (part of PwC’s consulting practice in Belfast), were released yesterday at the opening of the World Economic Forum Annual Meeting in Davos, Switzerland – PwC serves as a Strategic Partner of the Forum.

The report reveals that CEOs are less optimistic about global growth prospects than a year ago, with 37% of CEOs thinking global economic growth will improve in 2015, down from 44% last year. Significantly, 17% of CEOs believe global economic growth will decline, more than twice as many as a year ago (7%). The remaining 44% expect economic conditions to remain steady.

Confidence CEO global economic growtn

Regionally, the results show wide variations. CEOs in Asia Pacific are the most optimistic about the global economy with 45% anticipating improvement, followed by the Middle East (44%) and North America (37%). On the other hand, only 16% of CEOs in Central and Eastern Europe expect economic improvement. CEOs in emerging economies like India (59%), China (46%) and Mexico (42%) are more optimistic about the economy than those in developed economies like the US (29%) and Germany (33%).

Own company
Despite the overall declining outlook for the global economy, CEOs remain confident about prospects for their own company; 39% worldwide said they are ‘very confident’ their company’s revenues will grow in the next 12 months. That’s the same as last year; though up slightly from 36% in 2013.

CEOs in the Asia Pacific region (45%) are most confident of revenue growth, followed by the Middle East (44%), although this is down markedly from last year’s 69%. CEO confidence in growth is higher in North America, rising to 43% from 33%. CEOs in Western Europe (31%) and Central and Eastern Europe (30%) are least optimistic about their company’s growth prospects.

Concerns vary by region

PwC also asked CEOs which factors worry them most. The results show that over-regulation again tops the list of concerns, named by 78% of CEOs worldwide. This is up 6 points from last year and is now at the highest level ever seen in the survey. Countries where concern about over-regulation is particularly high include Argentina (98%), Venezuela (96%), the US (90%), Germany (90%), the UK (87%), and China (85%). Other top concerns cited by CEOs are availability of key skills (73%), fiscal deficits and debt burdens (72%), geopolitical uncertainty (72%), increasing taxes (70%), cyber threats and the lack of data security (61%) - going up rapidly from 48% last year – as well as social instability (60%), shifting consumer patterns (60%) and the speed of technological change (58%).

Labour market
From a labour market perspective, the results have remained relatively stable. Half of CEOs around the world say they will increase their headcount over the next 12 months, while 21% expect a decrease, about the same as last year. As CEOs seek to meet the challenge of finding the right people, 81% say they are looking for a broader range of skills, with digital capabilities high on the list.

Half of CEOs plan to increase headcount in coming year

“The world is facing significant challenges: economically, politically and socially. CEOs overall remain cautious in their near-term outlook for the worldwide economy, as well as for growth prospects for their own companies. While some mature markets like the US appear to be rebounding, others like the Eurozone continue to struggle. And while some emerging economies continue to expand rapidly, others are slowing. Finding the right strategic balance to sustain growth in this changing marketplace remains a challenge,” comments Dennis Nally, Chairman of PwC.

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