Confidence of Canadian CEOs returns for 2011: PwC’s 14th Annual Global CEO Survey

Outlook is split between emerging economies, developed nations

TORONTO, January 26, 2011 – Canadian CEOs' confidence in future growth has returned, according to PwC's 14th Annual Global CEO Survey released today at the World Economic Forum annual meeting in Davos.  The worldwide poll of 1,201 CEOs in 69 countries found that half of the Canadian CEOs surveyed said they were “very confident" of growth in the next 12 months (36% in 2010; 20% in 2009). 

Results were similar in the rest of the world, 48% of all CEOs said they were “very confident" of growth in the next 12 months. That's a major shift from the 31% last year who were "very confident" and approaches the 50% reached in 2008. Longer term, 95% of Canadian CEOs are confident of growth three years from now, again similar to leaders from other countries (94%).

Renewed confidence was spread across all continents, with CEOs in India, Austria, Colombia, Peru, China, Thailand and Paraguay particularly upbeat about near-term growth. Regionally, CEOs in Western Europe were the least confident. German CEOs were an exception, with nearly 80% of CEOs "very confident," up from about 20% last year. 

Where will CEOs find future growth?

Analysis from PwC’s recent report ‘The World in 2050’ shows that the GDPs of E7 emerging economies (China, India, Brazil, Russia, Mexico, Indonesia and Turkey) are likely to overtake the G7 economies (US, Japan, Germany, UK, France, Italy and Canada) before 2020.

But while global results indicated that CEOs considered China the most important country for future growth, Canadian leaders still felt their key trading partner to the south was the most important (60% said the US). China was named by 39% of all CEOs as the most important country for future growth, followed by the US, 21%; Brazil, 19%; and India, 18%. And China, the US and India were seen as the most important future sources for products and raw materials. Regionally, 90% of CEOs worldwide said they expect their operations to grow in Asia in the next 12 months, followed by Latin America, 84%; Africa, 75%; the Middle East, 72%; and Eastern Europe, 70%.

More than half of Canadian CEOs said our nation offers high growth potential, only a third of all global respondents feel the same way about their domestic market.

Strategically, the best opportunities for growth in the next 12 months will come from the development of new products and services and from increasing share in existing markets, cited by more than a quarter of Canadian CEOs (29% worldwide). Notable is that Canadian CEOs were more likely to recognize mergers and acquisitions (23%) as a growth strategy compared to their global counterparts (14%).

Particularly in Canada, the positive momentum in CEO confidence was reflected in hiring plans; 61% of Canadian CEOs (51% worldwide) said they expected to add jobs in the next 12 months. CEOs in Central Europe, Asia Pacific and Africa were also bullish about hiring. Only 8% of Canadian CEOs said they expected to cut their workforce in the coming year (16% globally).

The impact of the recession on strategy was also evident in the survey results. Most Canadian CEOs – 78% – said they had changed their company's strategy in the past two years (84% worldwide), and about a third said the change was fundamental. Strategic changes were driven primarily by economic uncertainty, customer requirements, competitive threats and the post-recession dynamics in their industry. Most leaders around the world said they plan to change their management strategies for talent (83%), risk (77%), investments (76%), and organisational structure (74%).

Fewer of the total respondents to the survey, 64%, said they planned to cut costs in the next 12 months, down from about 70% last year and 34% said they would complete a merger or acquisition. In Canada, nearly 70% of CEOs expect to form a new strategic alliance or joint venture, while 23% will outsource a business function. Western Europe, Asia and North America were the most popular venues for M&A.

Threats to future business:

Nearly three-fourths of CEOs worldwide cited uncertain or volatile economic growth as a potential threat to their business, up from 66% last year. And nearly a third of CEOs said they were “extremely concerned" about economic prospects. Other commonly mentioned threats included government response to fiscal deficits, 61%; trailed by exchange rate volatility, 54%; unstable capital markets, 52%; and protectionism, 40%.

Canadian CEOs are less worried than their global counterparts about over-regulation, 43% of cited this as a significant concern, compared to nearly 60% of global CEOs. Inflation was cited by only 13% of Canadian respondents (31% worldwide).

Among business threats, 60% of Canadian chiefs said the availability of key skills, followed by permanent shifts in consumer spending, 35%, new market entrants and the inability to finance growth, 33% were their main concerns. While an increasing tax burden was cited by 56% of global respondents as a major concern, only 20% of Canadian respondents feel similarly.

The rate of concern for global risks expressed by Canadian CEOs differs from CEOs around the world and includes pandemics and other health crises (45%), climate change (35%) and political instability (33%). Political instability was the foremost concern globally at 58%, followed by the scarcity of natural resources, 34%, climate change, 27% and natural disasters, 25%.

The complete survey report with supporting graphics can be downloaded at www.pwc.com/ceosurvey.

Survey Methodology:

For PwC's 14th Annual Global CEO Survey, 1,201 interviews were conducted in 69 countries during the last quarter of 2010. By region, 420 interviews were conducted in Western Europe, 257 in Asia Pacific, 221 in Latin America, 148 in North America, 98 in Eastern Europe and 57 in the Middle East & Africa. In Canada, 40 CEOs were surveyed.

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