Respondents to professional services firm PwC’s twenty-fifth yearly Global CEO Survey point to optimism about continued economic resilience this year, albeit with the International Monetary Fund projecting global gross domestic product (GDP) to grow by only 4.9%.
Although this forecasted GPD is lower than the 5.9% growth expected in 2021, PwC says it is “still formidable” and a rebound from the depths of mid-2020.
Although 22% of the 4 446 CEOs from 89 countries and territories surveyed have made net-zero carbon commitments, most are still worried about other factors, such as the potential for a cyberattack or macroeconomic shock to undermine the achievement of their company’s financial goals.
This, PwC says, is the same goals that most executive compensation packages are still tied to.
As a result, PwC suggests that CEOs without financial incentive to do so are less concerned about challenges like climate change and social inequality, which appear to pose smaller immediate threats to revenue.
Nonetheless, PwC’s survey provides an idea of what is possible with a reimagined status quo, placing emphasis on the factor of trust.
As such, the survey finds that highly-trusted companies are more likely to have made net-zero commitments and to have tied their CEO’s compensation to nonfinancial outcomes, such as employee engagement scores and gender diversity in the workforce.
However, the firm also says that correlation is not causation, with attention to be paid in this area in future surveys to monitor any advances. “But at first blush, they suggest a relationship between trust and the ability to drive change – a means of moving beyond short-term, ‘it is the next leader’s problem’ thinking,” states PwC.
In aggregate, the survey finds that CEO optimism has remained stable and high.
When PwC surveyed CEOs in October and November 2021, 77% reported an expectation for global economic growth to improve this year – an uptick of one percentage point from PwC’s previous survey (conducted in January and February 2021) and the highest figure on record since 2012, when the firm started asking CEOs how they felt about the economy’s potential.
The survey finds that CEOs in Brazil, China, Germany and the US report feeling less optimistic than they were a year ago that growth rates are poised to increase, whereas those in India, Japan and the UK are even more optimistic than they were in early 2021.
The firm says these differences may simply reflect where CEOs see themselves in the economic cycle. China and the US, for example, rebounded ahead of the rest of the world and are now experiencing growing pains in the form of inflation, real estate bubbles and supply chain disruptions. PwC says both countries are also facing labour shortages.
In China, shifting demographics and structural unemployment are creating a growing gap; in the US, headlines about the “great resignation” and early retirement predominate.
More than half of CEOs surveyed by PwC also report high levels of confidence about their own prospects for revenue growth over the next 12 months.
Most upbeat of all are CEOs of private equity firms, 67% of whom are highly confident about their company’s growth; and technology firms at 64%. PwC says both these sectors continue to benefit from large inflows of capital, owing to the favourable financial conditions prevailing in most advanced economies.
Among the CEOs expressing a more tepid outlook are those in the automotive (46%) and hospitality and leisure sectors (44%), which are grappling with semiconductor shortages and the lingering effects of the pandemic on travel, respectively.
PwC further says that it remains to be seen whether the pandemic trajectory will shift and present new constraints on some industries.
The firm reports that the threats CEOs are most worried about and the impact they see those threats having on their business in the next 12 months reveal leaders are under pressure to deliver top-line results.
Similar to 2021, 49% of CEOs are most concerned about cyber-risks, while 48% are worried about the global health situation as the Covid-19 pandemic lingers.
However, PwC points out that 40% of CEOs in the manufacturing and 39% in consumer sectors displayed lower levels of concern about cyber-risks, despite those sectors’ high volume of cyberattacks.
The third highest on the threat list for all CEOs is macroeconomic volatility, including fluctuations in GDP, unemployment and inflation.