Global vs. Organisational Growth: Carpe Diem

PwC's 21st CEO Survey: The Anxious Optimist in the Corner Office

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PwC's 21st CEO Survey: Global Chairman Bob Mortiz on CEOs' record high optimism for 2018. Duration 2:06

''Our Global CEO Survey saw the highest-ever jump and level of CEO optimism in global growth prospects over the next 12 months.''

Bob Moritz, Global Chairman, PwC US

For the first time since we began asking the question in 2012, the majority of CEOs surveyed believe global economic growth will ‘improve’. In fact, the percentage of CEOs predicting ‘improved’ growth doubled from last year, a record leap. This unprecedented level of optimism holds fast across every region from North America (defined as the US and Canada for this survey) and Latin America to Western Europe, Central & Eastern Europe (CEE), Africa, the Middle East, and Asia-Pacific.

We have only to look past frantic geopolitical headlines to current economic indicators to understand the reason why. When all the data is in, 2017 will almost certainly turn out to be the best year the global economy has seen since 2010. This rising tide is not just an overall macroeconomic phenomenon; it is balanced across regions. Most of the world’s major economies are experiencing positive growth, in contrast to the situation just a few years ago.

Given the Trump administration’s pro-business agenda of corporate tax cuts and rolled-back regulation, it’s little wonder that North America is so positive, with nearly two-thirds of CEOs reporting that they believe global economic growth will improve, and a majority indicating that they are ‘very confident’ about their own organisation’s revenue growth in 2018.

The record jump in positivity with regard to global economic growth does not translate into an equivalent leap in confidence in their own organisation’s 12-month prospects, however. Regionally, it’s a mixed bag with North America, Latin America, Central & Eastern Europe, and Asia-Pacific reporting higher levels of ‘very confident’, and the rest of the world moving in the opposite direction. Still, North America is the only region where a majority of CEOs demonstrate the highest possible level of confidence in their company’s revenue growth prospects over the next 12 months.

This divide is quite striking. While the rest of the world is cautiously optimistic, North American CEOs have never been more sure of their company’s near-term prospects. Just last year, only 39% reported that they were ‘very confident’; that figure jumps to 53% this year. The last time North American CEOs were this exuberant was in 2007, the year before the global financial crisis.

When we look at the geographic markets CEOs are turning to for growth, again, North America, specifically the United States, tops the chart; 46% of global CEOs consider it one of the three most important countries for growth, followed by China at 33%. Germany strengthens its hold on third place, with one in five CEOs considering it an important growth market.

Record CEO optimism

When we asked CEOs about their own organisation’s growth over the next three years, the bandwagon slows down.  While still generally confident, more CEOs say they are ‘somewhat confident’ rather than ‘very confident’.  In fact, all regions — North America included — report flat to diminished levels of ‘very confident’ in their own longer-term prospects.

Typically, CEOs report more confidence in the longer term than in the immediate future. The last time we saw ‘somewhat confident’ levels above ‘very confident’ levels was in 2009, when confidence, in general, took a nosedive in the aftermath of the global financial crisis.

But don’t read into this dip as a similar harbinger of doom. It may simply be harder for CEOs to see beyond the near term. So much has happened in geopolitical arenas around the world that expert observers could not have predicted, and the impact of technology is becoming increasingly disruptive. Combined, these conspire to cloud any clear view of the road ahead.

 

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Ilona Steffen
Global Marketing & Insights Director, PwC Switzerland
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