What a difference two years can make. In 2018, PwC’s Annual Global CEO Survey revealed a record level of optimism regarding worldwide economic growth. The 2019 survey, as CEOs looked ahead to 2020, revealed a record level of pessimism.
For the first time, more than half of the CEOs surveyed believe the rate of global GDP growth will decline. This caution has translated into CEOs’ low confidence in their own organisation’s outlook. Only 27% of CEOs are “very confident” in their prospects for revenue growth in 2020, a low level not seen since 2009. This finding is compelling because, according to PwC’s analysis, the change in CEOs’ revenue confidence has proven to be a reliable indicator of both the direction and the level of global GDP growth in the year ahead.
What is clouding the view from the top? In a word, uncertainty. PwC’s 23rd Annual Global CEO Survey, which involved 1,581 chief executives in 83 territories, explores the sources and manifestations of uncertainty and how CEOs are taking action to address it. Conducted in September and October of 2019, this survey focuses on CEO insights in the following top-of-mind areas: growth, technology regulation, upskilling and climate change. The following four key themes emerged.
1. Uncertainty undermines outlook
No matter where CEOs look or from where they are looking, the path forward is fraught with uncertainty. And uncertainty weighs on growth. In the past two years, the percentage of CEOs who believe global GDP growth will decline has increased tenfold (from 5% to 53%). In every region, CEOs report increased pessimism. And in almost every region, they show significantly diminished confidence in their own organisation’s 12-month revenue growth prospects.
CEOs are more sanguine about the prospects for the coming three years. However, confidence levels are still at a low not seen since 2009. Over-regulation remains the top threat, but concern is also rising over uncertain economic growth, in particular, as well as over trade conflicts, climate change and cyber threats. The unknowns on all of these fronts cloud CEOs’ outlook on the road ahead.
2. Setting up guard rails in cyberspace
The internet – the great global connector and democratiser of information – is now confronting the unintended and dangerous consequences of its promise. With no effective global framework in place that can govern practices or control attacks on digital technology, a majority of CEOs surveyed foresee increasing legislation around online content, data privacy and dominant tech platforms. As a result, it is likely that the internet will become more fractured.
The backlash against the internet’s dominant model of one global, all-encompassing and all-knowing platform is an expected development – and may lead to a path forward that is at once more distributed and underpinned by certain common standards. If the global economy is to realise the full promise of the Fourth Industrial Revolution, a greater level of coordination on these issues will be necessary.
3. To upskill or not to upskill is no longer the question
There are correlations between upskilling progress, economic optimism and revenue confidence. Furthermore, CEOs who have embraced the potential of upskilling are reaping the rewards, which include a stronger corporate culture, greater innovation and higher workforce productivity.
Those furthest along in the upskilling journey cite employee retention as the primary challenge, whereas those just beginning the process find motivation and lack of resources to be the biggest obstacles.
One reality is clear: increases in automation, changes in demographics and new regulations will make it much harder for organisations to attract and retain the skilled talent they need to keep pace with the speed of technological change. They will have to grow their own future workforce.
4. Climate change: an opportunity cloaked in crisis
The tide has turned on climate change. Organisations worldwide are starting to recognise its risks – and even its potential opportunities. Compared with ten years ago, CEOs today are far more likely to see the benefits of going “green”, including:
- reputational advantage
- new product and service opportunities
- government or financial incentives.
Looking at the results on a regional basis, there are some expected findings and a few concerning ones. Organisations in Western Europe and Asia-Pacific are furthest ahead in assessing the risks of transitioning to a greener economy. This is not surprising, given government commitments to sustainability in these regions. By contrast, in the Middle East, where economies are most exposed to the global progression towards clean energy, organisations are comparatively behind in assessing the changes likely to result from a low-carbon future.
For further insights into the implications of the survey findings, email me or call me on 020 7099 2621.