Arthur Wightman, PwC
The mood among global CEOs has reached a low ebb, with more than half (53 percent) of them expecting the rate of economic growth to decline in 2020, according to PwC’s 23rd Annual Global CEO Survey.
In 2019 only 29 percent of CEOs predicted the rate of economic growth would decline, while only 5 percent of them did in 2018.
Pessimistic CEOs now outnumber optimistic ones, with only 22 percent of them predicting a rise in the rate of economic growth, down from 42 percent in 2019.
The mood was especially downbeat in North America, Western Europe and the Middle East, with 63 percent, 59 percent and 57 percent of CEOs from those regions, respectively, predicting lower global growth in the year ahead.
CEOs’ confidence in their own businesses is also falling, with only 27 percent of them saying they are “very confident” in their own organisation’s growth over the next 12 months, the lowest level since 2009 and down from 35 percent last year.
China and India had the most confident CEOs among major economies, with 45 percent and 40 percent, respectively, very confident in achieving growth, while among US CEOs the figure was 36 percent. Among UK CEOs, 26 percent were very confident of achieving growth, while in Germany and France it was 20 percent and 18 percent, respectively. Japan had the least optimistic CEOs, with only 11 percent of them very confident of growing revenues in 2020.
PwC warned that historically the correlation between CEO confidence in their 12-month revenue growth and the actual growth achieved by the global economy has been high. “If the analysis continues to hold, global growth could slow to 2.4 percent in 2020, below many estimates, including the 3.4 percent October growth prediction from the IMF,” PwC said.
Bob Moritz, chairman, of the PwC Network, said it was no surprise CEOs were feeling less confident, given trade tensions, geopolitical issues and the lack of agreement on how to deal with climate change, but admitted the scale of the change of mood was unexpected.
“These challenges facing the global economy are not new – however the scale of them and the speed at which some of them are escalating is new, the key issue for leaders gathering in Davos is: how are we going to come together to tackle them,” said Moritz.
Arthur Wightman, PwC Bermuda leader, praised the insurance industry for taking positive steps towards increasing its own sustainability, for example in its increasing use of mobile and digital technology.
“These digital-led strategies are percolating into other layers of their businesses and help to vary premiums according to the behaviour of their customers,” Wightman said. “This can influence wider decisions made by governments and businesses, for example, in how they approach building in flood-prone areas.”
Wightman said the insurance industry, and Bermudaian insurers specifically, play a significant role in helping to manage the downside risks of increasingly frequent and severe weather events. However, he admitted they have “farther to go to increase resilience, reduce harm and transition to a low carbon society.”
He called for “radical changes in the way the global economy functions and a far greater emphasis by businesses on the role they play in sustainability. Not just for their business but for society at large.”
Wightman demanded CEOs “develop and integrate a detailed sustainability vision into their long-term strategic plan and articulate how this is contributing to specific UN Sustainable Development Goals.”
Meanwhile, CEOs also expressed concern about the shortage of key skills, which was seen as among the top threats to growth. CEOs agree that retraining and upskilling is the best way to close the skills gap, PwC said. However, only 18 percent of CEOs believe they have made significant progress in establishing an upskilling programme, according to the survey.
PwC’s survey of almost 1,600 CEOs from 83 countries across the world was launched on January 20 at the World Economic Forum Annual Meeting in Davos, Switzerland.
PwC, Arthur Wightman, Bob Moritz, PwC Network, Annual Global CEO Survey