Global business leaders are feeling positive about the economic climate in the near future, according to the 21st annual survey of CEOs conducted by PwC. The survey, which included approximately 1,300 CEOs from around the world, was released at the World Economic Forum Annual Meeting in Davos, Switzerland.
A significant majority (57%) of CEOs believe that global economic growth will improve in the next year. This represents a substantial increase from last year’s 29% and marks the largest surge in positive sentiment since PwC began tracking global growth projections in 2012. This optimistic outlook is reflected across the globe, including countries traditionally known for more conservative economic forecasts.
This surge in confidence regarding the global economy translates into increased confidence in the performance of individual businesses as well, though the increase is less dramatic. This year, 42% of CEOs expressed strong confidence in their own companies’ growth prospects over the next 12 months, compared to 38% last year.
However, the outlook varies depending on the specific country. While CEO confidence saw an uptick in key markets like Australia and China, the overall picture is mixed. The technology, business services, and pharmaceutical and life sciences sectors emerged as the top three most confident sectors, with all three exceeding the global average for confidence in their own 12-month growth prospects.
CEOs continue to rely on strategies for growth that are similar to those employed last year, including organic growth, cost reduction, strategic alliances, and mergers and acquisitions. A slight increase was observed in interest towards collaborating with entrepreneurs and startups.
The United States has solidified its position as the top market for growth, surpassing China. Germany maintains its third-place ranking, followed by the UK and then India, which replaced Japan as the fifth most attractive market in 2018.
The strong confidence in short-term revenue growth is contributing to job growth, with 54% of CEOs planning to expand their workforce in 2018. Only 18% anticipate a reduction in headcount. The healthcare, technology, business services, communications, and hospitality and leisure sectors emerged as having the greatest need for new employees.
A significant concern for many CEOs is the availability of individuals skilled in digital technology. Over a quarter of CEOs expressed extreme concern about the availability of digital skills within their home countries. Investments in areas like modern work environments, learning and development programs, and collaborations with other organizations are among the top strategies being employed to attract and cultivate the digital talent needed.
CEOs acknowledge the impact of technology on jobs and the need to support employees through retraining. They also recognize the importance of transparency regarding the potential effects of automation and artificial intelligence on jobs.
While a small percentage of CEOs plan workforce reductions, a significant majority believe technology will play a role in those job losses. This trend is particularly evident in the financial services sector.
Despite the overall optimism surrounding the global economy, CEOs are increasingly worried about broader threats to business, such as geopolitical uncertainty, cyber threats, and terrorism. These concerns now overshadow more traditional business concerns like exchange rate volatility and shifting consumer behavior.
The increased awareness of climate change and its potential impact on business is also evident, with CEOs expressing heightened concern about these issues. High-profile weather events and the US withdrawal from the Paris Agreement have propelled the issues of climate risk, regulation, and resilience to the forefront for businesses.
CEOs are increasingly aware of the fractured state of the world and are grappling with how to navigate this new landscape. They recognize that traditional measures of economic success may not be sufficient in the future and that broader metrics encompassing societal well-being are necessary.
CEOs also recognize the changing expectations placed upon businesses. They face pressure to deliver results quickly and are increasingly held accountable for their actions, including instances of misconduct. The pressure to take public stances on political and social issues is also mounting, particularly in certain sectors.