23 Jan 2018 | 10.36 am
CEOs Optimistic About Economic Growth
PwC survey finds ‘populism’ is now a worry for bosses
23 Jan 2018 | 10.36 am
CEOs are happy and optimistic for now about the economic environment worldwide, Davos billionaires and political leaders were told this week, as PwC released the findings of a global survey at the World Economic Forum.
PwC surveyed around 1,300 CEOs worldwide for its latest research. Some 57% of business leaders said they believe global economic growth will improve in the next 12 months. The figure is almost twice what PwC recorded last year and the largest increase since the firm began asking about global growth in 2012.
“CEOs’ optimism in the global economy is driven by the economic indicators being so strong. 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,” said Bob Moritz, global chairman of PwC.
PwC’s latest Global Economic Outlook projects Ireland to be the fastest growing eurozone economy for 2018 through to 2024. The Irish economy is projected to show GDP growth of 3.5% in 2018 and average growth of 2.8% for the period 2020 to 2024, compared with eurozone average growth of 2.2% and 1.6% respectively for these periods.
Speaking about Ireland, Feargal O’Rourke (pictured), PwC Ireland managing partner, said that its strong economic growth is based on continued investment and household consumption growth, as well as continuing FDI flows.
“This is boosted by a favourable business environment, decreasing unemployment as well as positive economic news in the eurozone expected to boost Irish exports,” he added.
“The positivity in our PwC Global CEO report can only be good news for Ireland, as a continued strong global economy will underpin the strong progress that has been made here in recent years.”
O’Rourke also cautioned that uncertainties still exist that could affect Ireland’s economic prospects. “Global tax reform together with the impact of the US tax overhaul is a priority on many Irish boardroom agendas.
“Uncertainties continue to loom around Brexit, and technological disruption will redefine how we work and live. We see companies tackling these challenges head-on as they continue to invest in their businesses and their people, building markets and using technology to innovate how they operate.”
In the US, PwC found that CEOs’ confidence has recovered. After election nerves last year, the early focus on regulation and tax reform by the new administration has seen confidence in business growth prospects for the year ahead rising significantly – from 39% in 2017 to 52% in 2018. And North America is the only region where a majority of CEOs are “very confident” about their own 12-month prospects.
In the UK, business leaders’ short-term confidence fell from 41% in 2017 to 34% in 2018, fuelled by ongoing Brexit difficulties.
According to PwC, the top three most confident sectors for their own 12-month prospects this year are technology (48% “very confident”), business services (46%), and pharmaceutical and life sciences (46%) – all exceeding the global “very confident” level of 42%.
Strategies for growth remain largely unchanged on last year’s survey – CEOs will rely on organic growth (79%), cost reduction (62%), strategic alliances (49%) and M&As (42%). There was a small increase in interest in partnering with entrepreneurs and startups (33% vs 28% last year).
Confidence in short-term revenue growth is feeding into jobs growth, with 54% of CEOs planning to increase their headcount in 2018 (2017: 52%). Only 18% of CEOs expect to reduce their headcount.
In other findings, PwC reports that two-thirds of CEOs believe they have a responsibility to retrain employees whose roles are replaced by technology, chiefly amongst the engineering and construction (73%), technology (71%) and communications (77%) sectors.
Almost a quarter (24%) of CEOs in banking and capital markets, and insurance, plan workforce reductions, with 28% of banking and capital markets jobs likely to be lost to a large extent due to technology and automation.
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%).
The threat of over-regulation remains the top concern for CEOs (42% extremely concerned), and over one-third (36%) remain concerned about an increasing tax burden.
To compile the survey, PwC conducted 1,293 interviews with CEOs in 85 countries between August and November 2017.