Geopolitical Threats Rise as CEO's Global Growth Confidence Falls
(Thomson Reuters ONE) -
* Confidence in global economy falls by 10 points
* Concerns about geopolitical uncertainty increase sharply
* Revenue prospects decline in major economies
* 90% are changing how they use technology to assess and deliver on customer
and other stakeholder expectations
DAVOS, Switzerland, Jan. 19, 2016 (GLOBE NEWSWIRE) -- Two-thirds of CEOs (66%)
see more threats facing their businesses today than three years ago. Just over
a quarter (27%) believe global growth will improve over the next 12 months, a
decline of 10 points on last year.
Infographics accompanying this announcement are available at
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Videos accompanying this announcement are available at
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In addition, findings from PwC's Annual Global CEO survey show only slightly
more than a third (35%) are very confident of their own company growth in the
coming year, down four points on last year (39%), and even one point below 2013.
The results, in PwC's Annual CEO Survey - 'Redefining business success in a
changing world' - underline a gloomy outlook for the global economy in the next
twelve months. More than 1,400 CEOs were interviewed for the research, which is
published today at the opening of the World Economic Forum Annual Meeting in
Davos, Switzerland.
China's economic rebalancing, crude oil price falls, and geopolitical security
concerns are all impacting an overall increase in uncertainty about the global
economy's growth prospects. Globally, only just over a quarter (27%) of CEOs
think global growth will improve over the next 12 months, compared to 37% last
year, while 23% think it will worsen (2015: 17%). Levels of optimism amongst
North American CEOs is half that (16%) of the most optimistic regions (Western
Europe 33% and Middle East 34%). Almost a third of China's CEOs (33%) believe
global economic growth will slow down in 2016.
Revenue growth confidence falls
Confidence in businesses' own revenue growth for the next 12 months has also
fallen (35% 'very confident' vs 39% last year). Against this tide of pessimism,
CEOs in India (64%), Spain (54%) and Romania (50%) stand out as more
optimistic. The biggest turnaround is seen in Taiwan, where only 19% are very
confident of short-term company growth, compared to 65% last year - an
astonishing slump of 46 points. However, Switzerland has the lowest confidence
with only 16% of Swiss CEOs very confident of revenue growth compared with 24%
in 2015.
Confidence in revenue growth is also down compared to last year for nearly every
major economy in the world: China 24% (2015: 36%), United States 33% (2015:
46%), United Kingdom 33% (2015: 39%) and Germany 28% (2015: 35%). Italy 20%
(2015: 20%) and Japan 28% (2015: 27%) remained static. Only Russia bucks the
trend as confidence rose to 26% from a deep low of 16% last year.
Looking at investment prospects, the US, China, Germany and the UK remain the
countries CEOs view as most important for growth in the next 12 months. Mexico
and the UAE have also entered the top ten in place of Indonesia and Australia.
Commenting on the survey results, Dennis Nally, Global Chairman of PwC, says:
"There's no question that business leaders' confidence in both the global
economy and their own company growth prospects has taken a knock. No matter what
the business size, the threats it faces are becoming more complex, crossing the
borders of geopolitics, regulation, cyber security, societal development,
people, and reputation. There is a new spectrum of risk for CEOs that represents
threats to both national and commercial interests.
"The pessimistic outlook for the year ahead is reinforced by the position of the
US, China, Germany and the UK as being the most important for growth again. The
fact that CEOs continue to point to these 'safe havens' underlines the general
uncertainty about where real growth will come from in the long term."
CEOs see more threats
With heightened concerns about geopolitics, two thirds of CEOs (66%) now see
more threats facing their business today than there were three years ago.
As in most years the spectre of over-regulation is seen as the top threat to
companies' growth prospects, with 79% of CEOs citing this - the fourth year in a
row that concerns about regulation have risen. However geopolitical uncertainty
has jumped from fourth in CEO concerns last year to second this year, cited by
74% of business leaders. As a result, concerns about availability of key skills
have dropped from second to fourth, but remain a concern for nearly three
quarters (72%) of CEOs. Worries about exchange rate volatility are in third
place (73%).
Cyber security is also a worry for 61% of CEOs, representing threats to both
national and commercial interests. Concern is highest amongst CEOs in the US,
Australia and the UK (74%+) and in the banking, technology and insurance
sectors.
Skills and recruitment
Nearly half (48%) of CEOs plan to increase their headcount over the next 12
months, a slight drop on last year (50%). Business recruitment activity is
highest in India (70%), the UK (66%) and China (57%).
Concerns about the availability of key skills remains high (72%). Several
sectors have particularly high levels of concern, topped by entertainment and
media, and technology, while sectors more traditionally aligned with 'STEM'
skills including manufacturing, pharmaceuticals and life sciences, also feature.
Geographically, concerns are highest in Asia Pacific (81%), the Middle East
(83%) and Africa (86%), and lowest in Western Europe (59%).
Nearly half of CEOs say they are changing how they develop their pipeline of
leaders (49%), suggesting business leaders' recognition of the wider skills the
next generation of CEOs will need to tackle a more complex environment
encompassing technology, wider threats, and expectations of stakeholders for
their organisations. Perhaps reflecting CEO's wider views on rising stakeholder
expectations and business trust issues, 41% said they were focusing more on
workplace culture and behaviours.
Government & business
The top priority for government should be a clear and effective tax system, say
56% of CEOs, followed by a skilled, educated and adaptable workforce (53%), and
infrastructure (50%) - both physical and digital.
However CEOs tended to not rate their governments highly - particularly around
the effectiveness of the tax system, and income equality. Two thirds (67%) cite
a stable tax system as being more important than low tax rates.
Around a third (33%) rate governments as ineffective at safeguarding personal
data (26% effective), with China (46%), the US (60%), Brazil (72%) and Argentina
(52%) having the highest levels of concern.
Technology
The survey underlines technology's force in business for change and better
customer and stakeholder understanding.
Nine out of ten (90%) CEOs say they are changing how they use technology to
assess customer and wider stakeholder expectations, and deliver against them.
The most significant levels of change are reported in sectors with traditionally
high customer service expectations including banking and capital markets (90%),
insurance (95%), hospitality and leisure (94%) and healthcare (93%). Overall,
more than three quarters (77%) believe technological advances will have
transformed expectations of businesses over the next five years.
Data and analytical tools, and CRM systems are seen as having the greatest
return for stakeholder engagement. This is followed by R&D and innovation cited
by 53% of CEOs globally, with CEOs in Taiwan (76%), Brazil (72%) and Germany
(67%) prioritising it higher than the global average.
Internally however, technology & data analytics still has untapped potential. In
talent management, only 4% report using predictive workforce analytics, and 16%
use it to focus on productivity. Concerns about the speed of technological
change as a threat to growth prospects is being felt most acutely in the banking
and capital markets sector (81%), 20% higher than the global average (61%),
followed entertainment and media (79%), and technology (66%) sectors - mirrored
in CEOs concerns about skills in these sectors.
Trust and purpose in business
This year's survey examines how CEOs are preparing to respond to changing
customer and wider stakeholder expectations of business. 59% of CEOs say
businesses need to do more to communicate their purpose and values.
Trust is certainly a concern, as CEOs consider changing stakeholder needs. More
than a half (55%) of CEOs are concerned about the lack of trust in business,
compared with 37% just three years ago.
But there are barriers to responding to changing expectations. Many CEOs (45%)
say additional cost is stopping them from taking action to respond to greater
expectations. Unclear or inconsistent standards and regulations, cited by 42% of
CEOs, is also a significant barrier.
In five years' time, more than three quarters (77%) believe technological
advances will have transformed expectations of businesses on communication,
reporting, investment and planning. In addition, 71% of CEOs believe that in
five years' time, successful companies will be guided by a purpose centred on
creating value for wider stakeholders. 87% say companies will prioritise long-
term over short-term profitability. Overall they believe that customer and other
stakeholder needs will be more important than shareholders' in successful
organisations.
Adds Dennis Nally:
"The CEO environment is a challenging one. They recognise the wider stakeholder
expectations of their business. Reshaping companies built on profit alone into
ones where profit and purpose combine, is not going to happen quickly or easily,
but it's a transformation that is already starting and that businesses need to
keep pace with."
Notes to editors:
1. About the survey: PwC's 19(th) Annual Global CEO Survey was conducted during
the last quarter of 2015, with 1409 CEO respondents in 83 countries.
Regionally, 476 interviews were conducted in Asia Pacific, 314 in Western
Europe, 170 in Central and Eastern Europe, 169 in Latin America, 146 in North
America, 87 in Africa and 47 in the Middle East. Download the full survey or
examine the results in detail at www.pwc.com/ceosurvey.
2. List of country/regional CEO saying they are very confident of 12 month
growth.
---------------------------------------------------------------------------
Very confident of short-term revenue growth
---------------+--------------+--------------+--------------+--------------
| 2016 | 2015 | 2014 | 2013
---------------+--------------+--------------+--------------+--------------
India | 64 % | 62 % | 49 % | 63 %
---------------+--------------+--------------+--------------+--------------
Spain | 54 % | 35 % | 23 % | 20 %
---------------+--------------+--------------+--------------+--------------
Romania | 50 % | 44 % | 39 % | 42 %
---------------+--------------+--------------+--------------+--------------
Mexico | 46 % | 50 % | 51 % | 62 %
---------------+--------------+--------------+--------------+--------------
Argentina | 42 % | 17 % | 10 % | 26 %
---------------+--------------+--------------+--------------+--------------
Africa* | 42 % | *** | *** | ***
---------------+--------------+--------------+--------------+--------------
ASEAN** | 38 % | 47 % | 45 % | 40 %
---------------+--------------+--------------+--------------+--------------
South Africa | 37 % | 39 % | 25 % | 45 %
---------------+--------------+--------------+--------------+--------------
Global | 35 % | 39 % | 39 % | 36 %
---------------+--------------+--------------+--------------+--------------
Australia | 35 % | 43 % | 34 % | 30 %
---------------+--------------+--------------+--------------+--------------
UK | 33 % | 39 % | 27 % | 22 %
---------------+--------------+--------------+--------------+--------------
US | 33 % | 46 % | 36 % | 30 %
---------------+--------------+--------------+--------------+--------------
Nordic | 31 % | 26 % | *** | ***
---------------+--------------+--------------+--------------+--------------
Canada | 31 % | 36 % | 27 % | 42 %
---------------+--------------+--------------+--------------+--------------
Denmark | 30 % | 33 % | 44 % | NA
---------------+--------------+--------------+--------------+--------------
Germany | 28 % | 35 % | 33 % | 31 %
---------------+--------------+--------------+--------------+--------------
Japan | 28 % | 27 % | 27 % | 18 %
---------------+--------------+--------------+--------------+--------------
Russia | 26 % | 16 % | 53 % | 66 %
---------------+--------------+--------------+--------------+--------------
China | 24 % | 36 % | 48 % | 40 %
---------------+--------------+--------------+--------------+--------------
Brazil | 24 % | 30 % | 42 % | 44 %
---------------+--------------+--------------+--------------+--------------
Italy | 20 % | 20 % | 27 % | 21 %
---------------+--------------+--------------+--------------+--------------
Taiwan | 19 % | 65 % | *** | ***
---------------+--------------+--------------+--------------+--------------
Switzerland | 16 % | 24 % | 42 % | 18 %
---------------+--------------+--------------+--------------+--------------
* Africa excludes South Africa
** The ASEAN countries in which interviews were conducted are: Cambodia,
Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam
*** Not available
3. List of CEOs planning job increases by industry.
--------------------------------------------------------------------
Percentage of CEOs expected to boost headcount
in next 12 months (by industry)
--------------------------------+--------+--------+--------+--------
| 2016 | 2015 | 2014 | 2013
--------------------------------+--------+--------+--------+--------
Technology | 67 %| 55 %| 63 %| 44 %
--------------------------------+--------+--------+--------+--------
Asset Management | 65 %| 61 %| 58 %| 55 %
--------------------------------+--------+--------+--------+--------
Pharmaceuticals & Life Sciences| 64 %| 58 %| 44 %| 38 %
--------------------------------+--------+--------+--------+--------
Healthcare | 56 %| 59 %| 53 %| 43 %
--------------------------------+--------+--------+--------+--------
Hospitality & Leisure | 53 %| 45 %| 51 %| 33 %
--------------------------------+--------+--------+--------+--------
Business services | 51 %| 56 %| 62 %| 56 %
--------------------------------+--------+--------+--------+--------
Retail | 51 %| 46 %| 51 %| 49 %
--------------------------------+--------+--------+--------+--------
Transport & Logistics | 51 %| 49 %| 40 %| 43 %
--------------------------------+--------+--------+--------+--------
Insurance | 49 %| 50 %| 59 %| 39 %
--------------------------------+--------+--------+--------+--------
Automotive | 48 %| 49 %| 45 %| 44 %
--------------------------------+--------+--------+--------+--------
Communications | 48 %| 40 %| 52 %| 36 %
--------------------------------+--------+--------+--------+--------
Industrial Manufacturing | 47 %| 53 %| 46 %| 36 %
--------------------------------+--------+--------+--------+--------
Chemicals | 46 %| 50 %| 49 %| 43 %
--------------------------------+--------+--------+--------+--------
Mining | 45 %| 52 %| 25 %| 39 %
--------------------------------+--------+--------+--------+--------
Banking & Capital Markets | 43 %| 53 %| 52 %| 44 %
--------------------------------+--------+--------+--------+--------
Engineering & Construction | 42 %| 51 %| 51 %| 52 %
--------------------------------+--------+--------+--------+--------
Power & Utilities | 42 %| 36 %| 36 %| 41 %
--------------------------------+--------+--------+--------+--------
Consumer Goods | 41 %| 40 %| 46 %| 40 %
--------------------------------+--------+--------+--------+--------
Entertainment & Media | 39 %| 46 %| 53 %| 43 %
--------------------------------+--------+--------+--------+--------
Forest, Paper & Packaging | 36 %| 27 %| 45 %| 32 %
--------------------------------+--------+--------+--------+--------
Metals | 32 %| 41 %| 22 %| 28 %
--------------------------------+--------+--------+--------+--------
About PwC
At PwC, our purpose is to build trust in society and solve important problems.
We're a network of firms in 157 countries with more than 208,000 people who are
committed to delivering quality in assurance, advisory and tax services. Find
out more and tell us what matters to you by visiting us at www.pwc.com.
PwC refers to the PwC network and/or one or more of its member firms, each of
which is a separate legal entity. Please see www.pwc.com/structure for further
details.
© 2016 PwC. All rights reserved
Contact
Mike Davies, PwC
(On site at Davos) Tel: +44 (0) 7803 974136
E-mail: mike.davies(at)uk.pwc.com
Rowena Mearley, Global Media Relations, PwC
Tel + 1 646 313 0937
E-mail: rowena.j.mearley(at)us.pwc.com
For more details, go to www.pwc.com/ceosurvey
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