Almost three quarters of CEOs surveyed by PricewaterhouseCoopers (PwC) believe economic growth will decline over the next 12 months, revealing the most pessimistic outlook from global business leaders since the study was launched more than a decade ago.
The findings are a stark comparison to the outlooks of 2021 and 2022, when 76 per cent and 77 per cent of CEOs respectively thought economic growth would improve.
The survey, which polled 4,410 CEOs in 105 countries and territories in October and November 2022, also found that nearly 40 per cent of executives believe their organisations would not be economically viable in a decade if they continue on their current path.
“A volatile economy, decades-high inflation, and geopolitical conflict have contributed to a level of CEO pessimism not seen in over a decade,” PwC chairman Bob Moritz said.
“CEOs globally are consequently re-evaluating their operating models and cutting costs, yet despite these pressures, they are continuing to put their people front and centre as they look to retain talent in the wake of the 'Great Resignation.' The world continues to change at a relentless pace, and the risks facing organisations, people – and the planet – will only continue to rise.
“If organisations are not only to thrive – but survive the next few years – they must carefully balance the dual imperative of mitigating short-term risks and operational demands with long-term outcomes – as businesses that don't transform, won't be viable."
Economic downturn has been at the top-of-mind for global leaders this year, with 40 per cent worrying about inflation, followed by macroeconomic volatility (31 per cent), geopolitical conflict risk (25 per cent), cyber risks (20 per cent) and climate change (14 per cent).
In response to near-term economic challenges, CEOs say they are taking actions to spur revenue growth, with 52 per cent of executives saying they have already begun cutting costs.
Encouragingly, 60 per cent of executives had no intention to reduce headcount, while 80 per cent have no plans to lower compensation in order to retain talent.
The survey also found a majority of global CEOs expect some degree of impact from climate change in the next 12 months, primarily in their cost profiles - where roughly 50 per cent expect a moderate, large or very large impact.
Meanwhile, 42 per cent were worried about their supply chains and 24 per cent expressed concern about climate-related damage to their physical assets. CEOs in China feel most exposed, with 65 per cent seeing the potential for impact in their cost profiles, 71 per cent in supply chains and 56 per cent in physical assets.
“Deeper statistical analysis of the survey shows that the CEOs who feel most exposed to climate change are more likely to take action to address it,” PwC said.
“This kind of reactive approach is understandable—when your house is in the path of a forest fire, you reach for the hose—but it creates risks of its own.
“Combating climate change requires a coordinated, long-term plan. It won’t be solved if the only companies working on it are those that face immediate financial impact.”
When asked about the forces most likely to impact their industry’s profitability over the next ten years, half or more of surveyed CEOs cited changing customer preferences, regulatory change, and skills shortages.
Meanwhile, 37 per cent flagged the transition to new energy sources and supply chain disruption, and nearly one-third pointed to the potential for new entrants from adjacent industries.
"The risks facing organisations and society today cannot be addressed alone and in isolation,” Moritz said.
“CEOs must therefore continue to collaborate with a wide range of public and private sector stakeholders to effectively mitigate those risks, build trust and generate long term value – for their businesses, society and the planet."
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