Eva Jansen-Diener, AS PricewaterhouseCoopers, member of the management board
Global CEO Survey, the results of which were published in January at the Davos’ World Economic Forum by the audit and consultancy firm PwC, indicates that today’s CEOs face a business environment that’s becoming increasingly complicated to read and adapt to. Seven years on from the global financial crisis, the business landscape still hasn’t really returned to what it was. In fact, the level of worry is higher today than at any point in the past five years.
Concern about over-regulation in particular is still highest, cited by 79% of CEOs – making it the fourth year in a row that it’s risen. Geopolitical uncertainty, meanwhile, has become the second biggest concern, cited by 74% of business leaders. This comes at a time when terror attacks are increasing and touching every part of the world. Global conflicts are also connected to anxieties about social instability and readiness to respond to crises, named by 65% and 61% of CEOs, respectively.
Indeed, CEOs are keeping a very close eye on China’s economic rebalancing, the fragility of its debt-laden local governments and its faltering manufacturing sector.
All these factors are having different effects in different places, but together they’re increasing the level of uncertainty about the global economy, and CEOs are less optimistic about prospects this year. The optimists – those who think global growth will improve over the next 12 months – have dropped to 27% from 37% last year. Those who think it will worsen have increased from 17% to 23%.
As we might expect, CEOs’ confidence about their own company’s prospects for revenue growth in the coming year has also fallen, though not to the same extent as confidence about the world economy. 35% of CEOs are ‘very confident’ about short-term business growth compared to 39% last year.
PwC concludes that we are clearly in an environment where changes take place at tremendous speed, whether it’s economic leadership, political unrest, rise of extremist views around the world, new technologies and new business models. Companies and countries that will lead this new normal have to deal with an environment where there’s constant change, and be able to adjust to those at a faster and faster pace.