CEO optimism booms despite increasing anxiety over threats to growth – PwC’s 21st Global CEO Survey

• Optimism in global economic growth reaches record level and rises in all countries
• US reinforces its lead on China as a target market for growth in 2018
• Over half of CEOs expect their headcount to increase
• Terrorism, geopolitical uncertainty, cyber and climate change rise as threats to growth

DAVOS, Switzerland, 29 January 2018 – A record-breaking share of CEOs are optimistic about the economic environment worldwide, at least in the short term. That’s one of the key findings of PwC’s 21^st survey of almost 1,300 CEOs around the world, launched today at the World Economic Forum Annual Meeting in Davos.

Fifty seven percent of business leaders say they believe global economic growth will improve in the next 12 months. It’s almost twice the level of last year (29%) and the largest ever increase since PwC began asking about global growth in 2012.

Optimism in global growth has more than doubled in the US (59%) after a period of uncertainty surrounding the election (2017: 24%). Brazil also saw a large increase in the share of CEOs who are optimistic global growth will improve (+38% to 80%). And even among the less optimistic countries such as Japan (2018: 38% vs. 2017: 11%) and the UK (2018: 36% vs. 2017: 17%), optimism in global growth has more than doubled since last year.

“With the stock markets booming and GDP predicted to grow in most major markets around the world, it’s no surprise CEOs are so bullish,” comments Bob Moritz, Global Chairman, PwC.

Michael Bynoe, PwC East Caribbean leader, said: “CEOs are optimistic because there are tangible signals in the global economy that there are opportunities for growth. Most of the world’s major economies are experiencing positive growth in contrast to the case just a few years ago. We must hope that this growth will benefit our local and regional economies. We are always best placed when those countries on whom we depend for tourism are doing well.  Local businesses currently face tremendous challenges and any boost to business confidence would be welcome.”

Impact of technology on employment and skills a concern

CEOs say that helping employees retrain, and increasing transparency on how automation and AI could impact jobs is becoming a more important issue for them.

Two thirds of CEOs believe they have a responsibility to retrain employees whose roles are replaced by technology, chiefly amongst the Engineering & Construction (73%), Technology (71%) and Communications (77%) sectors.

The digital and automation transition is particularly acute in the Financial Services sector. Almost a quarter (24%) of Banking & Capital Markets and Insurance CEOs plan workforce reductions, with 28% of Banking & Capital Markets jobs likely to be lost to a large extent due to technology and automation.

Mr. Bynoe added: “Governments, communities, and businesses need to truly partner to match talent with opportunity, and that means new approaches to educating students and training workers in the fields that will matter in a technology-enabled job market. It also means encouraging and creating opportunities for the workforce to retrain and learn new skills throughout their careers.”

Threats to growth: CEOs fear wider societal threats they can’t control

Despite the optimism in the global economy, anxiety is rising on a much broader range of business, social and economic threats. CEOs are ‘extremely concerned’ about geopolitical uncertainty (40%), cyber threats (40%), terrorism (41%), availability of key skills (38%) and populism (35%). These threats outpace familiar concerns about business growth prospects such as exchange rate volatility (29%) and changing consumer behaviour (26%).

Underlining the shift, extreme concern about terrorism doubled (2018: 41% vs 2017: 20%) and terrorism enters the top 10 threats to growth. The threat of over-regulation remains the top concern for CEOs (42% extremely concerned), and over a third (36%) remain concerned about an increasing tax burden.

Key skills availability is the top concern for CEOs in China (2018: 64% extremely concerned vs. 2017: 52%). In the US (63%) and the UK (39%), cyber has become the top threat for CEOs displacing over-regulation. And in Germany, cyber jumped from being the fifth threat in 2017 to third place (28%) this year.

A year after the Paris Agreement was signed by over 190 nations, which saw countries commit to voluntary action on climate change and low carbon investment, CEOs’ concern about the threat of climate change and environmental damage to growth prospects has now doubled to 31% of CEOs (2017: 15%).

High-profile extreme weather events and the US withdrawal from the Paris Agreement have significantly raised the profile of business action on climate risk, regulation and resilience.  In China, over half (54%) of business leaders are extremely concerned about climate change and environmental damage as a threat to business growth, equal with their levels of concern about geopolitical uncertainty and protectionism.

Ends

Download the report at www.pwc.com/ceosurvey.

Notes

1. PwC conducted 1,293 interviews with CEOs in 85 countries between August and November 2017. Our sample is weighted by national GDP to ensure that CEOs’ views are fairly represented across all major countries. 11% of the interviews were conducted by telephone, 77% online, and 12% by post or face-to-face. All quantitative interviews were conducted on a confidential basis. 40% of companies had revenues of $1 billion or more: 35% of companies had revenues between $100 million and $1 billion; 20% of companies had revenues of up to $100 million; 56% of companies were privately owned.
2. Climate Change: Climate Change and environmental damage is reported in the top five threats for businesses in Asia Pacific, and Western Europe and recognised as a top five threat for the growth prospects of companies in the Energy and Utilities, Engineering and Construction, Transport and Logistics sectors.
3. Globalisation: When asked if globalisation has helped ‘close the gap between the rich and the poor’, nearly 40% of CEOs respond “not at all’. 30% said globalisation had not helped ‘avert climate change and resource scarcity’. More than one in four CEOs say that globalisation has not helped improve the ‘integrity and effectiveness of global tax systems’ at all.
4. Trust: 71% of CEOs are now measuring trust between their workforce and leadership: 74% between their organisation and its customers.  Action on cyber security, diversity and inclusion and increased transparency on business strategies and plans were amongst the key areas of focus.
5. While only 18% of CEOs expect to reduce their headcount, CEOs estimate that four out of five (80%) of those jobs affected will have been impacted in some way by technology – 52% to some extent and 28% to a large extent.
6. PwC’s Global Innovation 1000 Study this year found that 52% of respondents believe economic nationalism will have a moderate or significant impact on their company’s R&D efforts, replacing today’s integrated and interdependent network with isolated R&D nodes.