The currency of confidence

Alexander B. Cabrera Chairman and Senior Partner, PwC Philippines 16 Feb 2020

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CEOs would drop their face masks, but would rather not drop their growth targets, not after they’ve been set. The truth is, their resolve is stress-tested by the ripple effects of the unexpected – like a volcanic eruption, or a deadly virus – but there is nothing that keeps CEO confidence at bay like uncertainty.

Logic would tell you that the positive energy coming from high CEO confidence translates to a high level of economic activity. However, it is in fact statistically supported that the rate of CEO confidence in their own company’s revenue growth has a strong correlation to the rate of actual global economic growth.

Interesting, but sombering – the latest PwC Annual Global CEO Survey conveys that just over that past two years, confidence has waned dramatically. The report is calling the latest CEO outlook a record pessimism compared to the record optimism a decade ago. Let me get this straight: CEOs see slower growth but rule out recession as unlikely.

If we look at the culprits of pessimism, some usual suspects are there, such as availability of key talents, constant cyberthreats and climate change. But I must point out that thematically, what is really impacting CEO confidence is uncertainty authored by governments, as the uncertainties pointed out stem from policy, trade conflicts, over-regulation, protectionism and geopolitical situation. All these create uncertain global economic growth that makes global CEOs move more cautiously and slowly.

Let’s take advantage however of other insights, coming from CEOs interviewed, in the latest PwC report:

‘We must be efficient in order to grow’

...says Felipe Bayón of Ecopetrol in Colombia, referencing what seems to be a state of “deceleration trend” in terms of demand. Growing the bottom line through efficiency is obviously not only about economizing. It is about the best and efficient use of resources, reviewing business models, and even one’s products. The sibling of this efficiency challenge is aptly phrased by Arthur Huang of Miniwiz in Taiwan: how to create financial growth without wastage growth. The positive thing is that substantially more CEOs today are committed to investing in climate change initiatives compared to ten years ago.

To upskill or not to upskill, that is no longer the question.

It is no longer the question because people will get so good at creating automation and the casualty will be repetitive work, which is the least enjoyable aspect of working. But then, people need to be qualified or trained to take on the higher value unautomated activities. Daniel Dines of UiPath in the US poses an interesting dilemma, in relation to people not wanting to do work that they think can be automated: ”My biggest concern is what are people going to do if they don’t have work to do? Because work has a fantastic positive effect on people; it gives us a sense of purpose.”

The digital world can be split or fragmented

CEOs expect that culture will dictate the digital rules per economy. Jean-Pascal Tricoire of Schneider Electric in France says that “The notion of privacy, security or trust is very linked to your culture, and there is no one single culture in the world”. I believe this is an interesting perspective because international standards and conventions dictate many of the rules and smaller economies comply or risk being singled out or isolated. It is difficult to protect privacy and secure data that the owner willingly throws out in public anyway. But CEOs believe that regulations will compel those who mine data to pay for data.

“When two elephants fight, it’s the grass that suffers”

This saying shared by Chantelle Abdul of Mojec International in Nigeria is such a captivating depiction of the effects of the trade war. The compelled rearrangement or relocation of supply chains brings much uncertainty, and theoretically, opportunity for other economies. I say theoretically because there must be supportive policy to catch the opportunities. The relocation will happen in the most competitive and predictable territories. Case in point is the ongoing review of the country’s fiscal incentives: we can catch more if we encourage, rather than discourage, those who are already here to stay and expand.

Global sentiments impact everyone. However, some economies enjoy more resilience because of strong domestic activity. Let me, wearing local lenses, say these about our strengths:

We are fortunate to have a strong domestic market but we should remember that the export market is not a competition to our local market and is certainly not the enemy. Hence, to continue incentivizing the export sector will simply expand the economies available to us.

We continue to have the strong demographic advantage that allows us to gain resources simply from upskilling or right skilling. But we should address those that lead to a constant brain-drain. To see hope in the country, the millennials and Gen Zs should have relief from traffic through effective and safe mass transportation, and they should see an end to endemic corruption.

Local businesses continue to place most of their bets locally, despite regional opportunities, to the benefit of local economic health. But to buoy up confidence, there should be no divide and rule. There should only be one rule based on respect for institutions, fairness, and meritocracy. Show this, and the country will win trust and confidence.


Alexander B. Cabrera is the chairman and senior partner of Isla Lipana & Co./PwC Philippines. He is the chairman of the Integrity Initiative Inc. (II, Inc.), a non-profit organization that promotes common ethical and acceptable integrity standards. Email your comments and questions to aseasyasABC@ph.pwc.com. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

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Alexander B. Cabrera

Chairman and Senior Partner, PwC Philippines

Tel: +63 (2) 8459 2002

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