Nearly three-quarters (73%) of CEOs believe global economic growth will decline over the next 12 months, according to PwC’s twenty-sixth annual ‘Global CEO Survey’, which polled 4 410 CEOs in 105 countries and territories in October and November 2022.

The bleak CEO outlook is the most pessimistic that CEOs have been regarding global economic growth since PwC began asking this question 12 years ago, and is a significant departure from the optimistic outlooks of 2021 and 2022, when more than two-thirds (76% and 77%, respectively) thought economic growth would improve, the firm points out.

In sub-Saharan Africa, survey respondents expressed similar sentiments to their counterparts globally. Additionally, local and regional factors, such as loadshedding in South Africa, currency depreciations and inflation and specific skills requirements and growth opportunities, impact their businesses and their outlook for the future.

Over the coming weeks, PwC Africa will publish a series of territory perspectives, together comprising the Africa Business Agenda report, analysing these local and regional factors in more depth, the firm reports.

In addition to a challenging environment, nearly 40% of CEOs think their organisations will not be economically viable in a decade if they continue on their current path.

The pattern is consistent across a range of sectors, including telecommunications (46%), manufacturing (43%), healthcare (42%) and technology (41%).

CEO confidence in their own company’s growth prospects also declined dramatically since last year (-26%), the biggest drop since the 2008/9 financial crisis when a 58% decline was recorded.

Globally, business confidence around economic growth varies starkly, with Group of 7 economies, including France (70% vs. 63%), Germany (94% vs. 82%) and the UK (84% vs. 71%) – all weighed down by an ongoing energy crisis – being more pessimistic about their domestic growth prospects than they are about global growth.

CEOs are also seeing multiple direct challenges to profitability within their own industries over the next ten years.

More than half (56%) believe changing customer demand/preferences will impact profitability, followed by changes in regulation (53%), labour/skills shortages (52%), and technology disruptions (49%).

MAIN CONCERNS

While cyber- and health risks were the top concerns a year ago, the impact of the economic downturn is top of mind for CEOs this year, with inflation (40%) and macroeconomic volatility (31%) leading the risks weighing on CEOs in the short term – the next 12 months – and over the next five years.

Close behind, 25% of CEOs also feel financially exposed to geopolitical conflict risks, whereas concerns about cyberrisks (20%) and climate change (14%) have fallen in relative terms.

The war in Ukraine and growing concern about geopolitical flashpoints in other parts of the world have caused CEOs to rethink aspects of their business models.

Almost half of respondents that are exposed to geopolitical conflict are integrating a wider range of disruptions into scenario planning and corporate operating models either by increasing investments in cybersecurity or data privacy (48%), adjusting supply chains (46%), re-evaluating market presence or expanding into new markets (46%), or diversifying their product/service offering (41%).

In response to the current economic climate, CEOs are looking to cut costs and spur revenue growth. Fifty-two per cent of CEOs report reducing operating costs, while 51% report raising prices and 48% diversifying product and service offerings.

However, more than half (60%) say they do not plan to reduce the size of their workforce in the next 12 months. A vast majority (80%) indicate they do not plan to reduce staff remuneration to retain talent and mitigate workforce attrition rates.

CLIMATE RISK MITIGATION

While climate risk did not feature as prominently as a short-term risk over the next 12 months relative to other global risks, CEOs still see climate risk impacting their cost profiles (50%), supply chains (42%) and physical assets (24%) from a moderate to very large extent.

Recognising the impact climate change will have on business and society over the long term, a majority of CEOs have already implemented – or are in the process of implementing – initiatives to reduce their companies’ emissions (65%), in addition to innovating new, climate-friendly products and processes (61%), or developing data-driven, enterprise-level strategy for reducing emissions and mitigating climate risks (58%).

Despite an increasing number of countries now having some form of carbon pricing, a majority of respondents (54%) still do not plan to apply an internal price on carbon in decision-making, and over a third (36%) don’t plan to implement initiatives to protect their company’s physical assets and/or workforce from the impact of climate risk.

TRUST & TRANSFORMATION

CEOs noted the need to collaborate with a range of stakeholders to build trust and deliver sustained outcomes if they are to generate long-term societal value. The survey found that when organisations partner with non-business entities, it is to address sustainable development (54%), diversity, equity and inclusion (49%), and education (49%).

If organisations are to remain viable in the near and long term, they must also invest in their people and technological transformation agendas to empower their workforces, PwC notes.

Technologically, 76% of organisations say they are investing in automating processes and systems, implementing systems to upskill workforces in priority areas (72%), and deploying technology such as the cloud, AI and other advanced technology (69%).

However, many CEOs question whether critical preconditions for organisational empowerment and entrepreneurship – such as alignment to company values and leaders’ encouragement of dissent and debate – are present in their companies to tackle the increasingly complex risks organisations face.

Torn between the demands of short-termism and long-term transformation, CEOs say they are primarily consumed with driving current operating performance (53%), rather than evolving the business and its strategy to meet future demands (47%). If they could redesign their schedules, CEOs say they would spend more time on the latter (57%).