A survey by professional services firm PwC of more than 5 000 CEOs globally reveals record levels of optimism, with more than 76% suggesting global economic growth will improve this year.
The figures come from PwC's twenty-fourth 'Annual Global CEO Survey', which this year polled 5 050 CEOs in 100 countries and territories over January and February.
The percentage of CEOs expressing confidence in growth is up from 22% in 2020 and 42% in 2019, representing the highest level of optimism since the survey started asking this question in 2012, PwC reveal.
Optimism among CEOs over global economic growth is particularly strong in North America and Western Europe, with 86% and 76% of CEOs from these regions, respectively, predicting improved global growth in the year ahead.
PwC Network chairperson Bob Moritz says that, after a year of human tragedy and extensive economic hardship, it is encouraging to see that the people responsible for making investment decisions and hiring staff are feeling cautiously optimistic about the year ahead.
“CEOs have faith that growth will return, boosted by the rapid development of vaccines and their rollout in many parts of the world.”
He adds that, in 2020, CEOs had to rethink and reconfigure what they do and how they do it, while dealing with stretched balance sheets and supporting employees who have been forced to navigate extraordinary circumstances.
However, Moritz says CEOs now face two fundamental challenges, the first being how to build trust with a broad range of stakeholders, whose expectations of business are higher than ever before.
Secondly, they need to adapt their businesses and deliver sustained outcomes in a rapidly changing external environment. “Organisations that get this right will be best placed to come out of the pandemic as strong, resilient and productive businesses, able to withstand future shocks.”
However, while global confidence is up, PwC notes that there is wide variation across industries, reflecting the varying degrees to which consumer behaviour has been impacted by the pandemic.
For example, CEOs in the technology and telecommunications sectors show the highest levels of confidence at 45% and 43%, respectively; while, CEOs in the transportation and logistics (29%) and hospitality and leisure (27%) sectors are among the least confident about their ability to grow revenues over the next 12 months.
The survey also indicates that CEOs believe the US will extend its lead over China as the top destination for growth, with 35% of respondents eyeing growth, which is also seven percentage points ahead of China at 28%. In 2020, the US was only one percentage point ahead of China.
This change is driven by new political developments and existing tensions that have had an impact on the views of US CEOs. As such, PwC’s data shows that CEOs are reducing their emphasis on China as a growth driver and increasing their focus on Canada and Mexico. Compared to 2020, US CEOs' interest in the latter two countries rose by 78%.
Meanwhile, CEOs from China report growing interest in large economies such as the US, Germany and Japan — prime destinations for exports.
CLIMATE CHANGE URGENCY
PwC notes that, despite this year being the year of the twenty-sixth United Nations Climate Change Conference of the Parties, or COP26, CEOs have indicated that climate change is not being approached with urgency, with 30% expressing concerns about climate, up from 24% in 2020.
The finding also comes in the context of rising anxiety about nearly all types of threats.
Climate change still only ranks ninth among CEO’s perceived threats to growth.
Thirty-nine percent of the CEOs polled believe their organisation needs to do more to “measure” their environmental impact, while 43% believe their organisation needs to do more to “report” on it – a greater share than any other disclosure area.
PwC states that this is encouraging as more and better corporate information on environmental impact is key to driving the change needed to get to a net zero economy.
In terms of digital investments for the future, the PwC survey shows that 49% of CEOs project increases of 10% or more on spending for digital transformation.
Despite the rising level of concern CEOs are voicing about cyberattacks, this has not translated into definitive actions, notes PwC. Less than half of the CEOs planning for heightened digital investment are also planning to boost their spending on cybersecurity and data privacy by 10% or more.
At the same time, 36% of CEOs plan to use automation and technology to make their workforce more competitive, more than double the share of CEOs who said the same in 2016.