Canadian CEOs Expect Lower Growth: Increasing Tax and Debt Burden, Geopolitical Uncertainty, Currency Fluctuations, Volatile Commodity Prices and Overregulation Top Concerns

PwC’s Annual CEO Survey finds that nearly a third (31%) of Canadian CEOs believe global economic growth is in decline

TORONTO, Ontario – January 19, 2016 – PwC’s 19^th annual Global CEO Survey - ‘Redefining business success in a changing world’ – points to a less positive outlook for the global and Canadian economies. Published today at the opening of the World Economic Forum Annual Meeting in Davos, Switzerland, the survey - which includes responses from more than 1,400 CEOs - found that CEOs globally (66%) and in Canada (76%) see more serious threats facing their businesses today than three years ago. China’s economic rebalancing, falling oil prices and geopolitical uncertainties are all weakening CEO confidence, with 23% globally (31% in Canada) believing that global economic growth will fall over the next 12 months. 

Revenue growth confidence falls

Only 27% of CEOs (24% in Canada) believe global growth will improve over the next 12 months and just 35% (31% in Canada) say they are very confident in their own company’s growth prospects. The overwhelming majority of Canadian CEOs (92%) also believe business success in this changing world is going to be defined by more than financial profit.

“There’s no question that business leaders’ confidence in both the global economy and their own company growth prospects has taken a knock. No matter what the business size, the threats it faces are becoming more complex, crossing the borders of geopolitics, regulation, cyber security, societal development, people, and reputation. There is a new spectrum of risk for CEOs that represents threats to both national and commercial interests,” said Dennis Nally, Global Chairman of PwC. “The pessimistic outlook for the year ahead is reinforced by the position of the US, China, Germany, and the UK as being the most important for growth again.  The fact that CEOs continue to point to these ‘safe havens’ underlines the general uncertainty about where real growth will come from in the long term.”

“Canadian leaders see similar challenges to their global counterparts. In fact, Canada feels the impact of some of these threats more acutely given the nature of our economy. A weaker Loonie has positive and negative impacts – a higher cost for many imported goods is offset by the benefits to a more competitive manufacturing sector. Volatile commodity prices are also creating a lack of confidence,” said Bill McFarland, CEO, PwC Canada. “Canadian leaders are looking to redefine success in the 21^st century. How companies create, measure and communicate value for multiple stakeholders – customers, employees, suppliers, boards, communities and shareholders - is reshaping how we think about business success.”

Threats to Growth

Increased tax burdens top the list of threats to Canadian companies’ growth prospects at 80% (versus 68% in 2015, up 18%) – this is higher than their global counterparts who rank tax burdens as fourth on the list (69%). Geopolitical uncertainty is ranked as second this year, cited by 71% of Canadian business leaders. Currency volatility enters the Canadian list for the first time this year (65%) tied with concerns around the government response to fiscal deficit and high debt burden. Over-regulation is also a growing concern according to 63% of Canadian CEOs surveyed – up 10% from 2015.

Meeting the Needs of Evolving Stakeholders

This year’s survey examines how CEOs are preparing to respond to changing customer and wider stakeholder expectations of business. 59% of CEOs around the globe say businesses need to do more to communicate their purpose and values. Trust is certainly a concern, as CEOs consider changing stakeholder needs.  More than a half (55%) of CEOs globally (versus 33% in Canada) are concerned about the lack of trust in business, compared with 37% just three years ago.

Customers are considered to be the most important stakeholder group in terms of their impact on business strategy according to 90% of global CEOs. In Canada, customers are less of a focus according to 69% of respondents and are nearly tied with Government & Regulators at 67%. 76% of Canadian CEOs - compared to 45% globally - believe that the costs of doing business in Canada is a significant barrier to their growth plans and points to concerns around over-regulation and higher taxation.

“There is no doubt overregulation is a key concern of business leaders – they lead to higher costs as well as demand a disproportionate amount of time, attention and resources,” added Bill McFarland, CEO, PwC Canada.

Nine out of ten CEOs (88% in Canada) say they are changing how they use technology to assess customer and wider stakeholder expectations, and deliver against them. In five years’ time, more than three quarters of Canadian leaders (78%) believe demographic shifts will have transformed expectations of businesses on communication, reporting, investment and planning.

To view the full CEO Survey please visit www.pwc.com/ca/ceosurvey.

Follow PwC on Twitter at @PwC_Canada_LLP and on Facebook at www.facebook.com/pwccanada.
 

Notes to editors:

1. About the survey: PwC’s 19^th Annual Global CEO Survey was conducted during the last quarter of 2015, with 1409 CEO respondents in 83 countries.  Regionally, 476 interviews were conducted in Asia Pacific, 314 in Western Europe, 170 in Central and Eastern Europe, 169 in Latin America, 146 in North America, 87 in Africa and 47 in the Middle East. Download the full survey or examine the results in detail at www.pwc.com/ceosurvey.
   
2. List of country/regional CEO saying they are very confident of 12 month growth. 

* Africa excludes South Africa

** ASEAN countries in which interviews were conducted are: Cambodia, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam

*** Not available