A WORLD-WIDE poll to gauge the sentiment of CEOs on the global economy over the next 12 months has indicated turbulent times ahead, but they’re up for it.

Of the 1258 CEOs polled worldwide in PwC’s 15th Annual Global CEO Survey, 48 per cent believe the global economy will decline further in the next 12 months, while just 15 per cent believe it will improve during 2012.

However, almost three times as many CEOs are confident in their own companies’ growth prospects for the next 12 months than in the outlook for the global economy, suggesting they now know how to manage through difficult and volatile economic times.

Forty per cent of CEOs were reportedly ‘very confident’ of revenue growth for their companies in the next 12 months, down from the 48 per cent last year – though still up from the 31 per cent who were ‘very confident’ in 2010.

In addition, more than half of CEOs worldwide expect to increase headcount in the next 12 months, although the picture changes from sector to sector with hiring much more likely in entertainment and media than elsewhere.

Australia was rated by CEOs as one of the top 10 countries that was most important for their companies’ overall growth prospects. Other top 10 countries for growth prospects included China, US, Brazil, India and Germany.

“CEOs from around the world consider Australia as an important and strategic market for business growth. Increasingly we are being seen as a place for long-term and diverse business opportunities and not just as a mine, a farm or a beach,” says PwC Australia CEO Mark Johnson.

Unsurprisingly, the biggest decline in confidence about revenue growth this year was in Western Europe, where just a quarter of CEOs said they were ‘very confident’ of revenue growth, down sharply from almost 40 per cent last year.

China saw the biggest decline in confidence in the Asia Pacific region, with only 51 per cent of CEOs feeling ‘very confident’, compared with 72 per cent last year.

The debt crisis in the Eurozone continues to dampen confidence in business growth around the world.

However, CEOs still have confidence in their own leadership capabilities.

“Despite the largely pessimistic outlook, many CEOs are more confident in their ability to grow their businesses despite the uncertain and gloomy market conditions, as evidenced by the fact that the majority of CEOs plan to increase headcount in 2012,” says Johnson.

“It appears that CEOs are becoming accustomed to operating in a volatile global economy and they are getting much better at running their businesses more efficiently.”

Growth opportunities

According to the CEOs, the best strategic growth opportunities in the next 12 months will come from increasing share in existing markets and from developing new products and services, both cited by nearly one third of respondents.

New market penetration (18 per cent) and joint ventures and alliances (10 per cent) trailed as growth strategies.

The number of CEOs planning M&A activity remains relatively low with prospects for a recovery in the deals market still looking some way off.

Emerging markets remain a vital growth opportunity for CEOs. Overall, 59 per cent agreed that growing markets were more important to their company’s future than more developed economies. Almost half of CEOs from developed nations said that emerging markets were most important to their future.

Top growth targets were the BRIC countries (Brazil, Russia, India and China), joined by the US and Germany. In all, when asked to select the top three targets for growth, more than 60 different countries were named.

The talent challenge

Scouting and retaining key staff remains a top concern for CEOs. Only 30 per cent said they are ‘very confident’ they will have access to the talent needed to execute their company’s strategy, and 43 per cent believe it’s more difficult to hire workers in their industry.

Recruiting and retaining high potential middle managers is the biggest talent challenge, followed by hiring skilled production employees and younger workers.

This challenge cuts across all industries, even those with different talent needs, such as industrial manufacturing and pharmaceuticals.

Despite the sluggish economy, businesses are gearing up to hire. More than half said they had increased staff in in the past 12 months and about the same percentage expect hiring momentum to continue.

A potential shortfall of talent was also cited by 53 per cent of CEOs as a threat to growth. The availability of skills was seen as a top concern across all geographic regions outside of Europe. Other frequently cited threats to growth included potential tax increases (55 per cent); changing consumer spending patterns and behaviours, (50 per cent); energy costs (46 per cent); inability to finance growth (40 per cent); new market entrants (38 per cent); supply chain security (34 per cent); and inadequacy of basic infrastructure (30 per cent).

Close to 70 per cent wished they could spend more of their own time developing the leadership and talent pipeline in their company, placing it just behind meeting with customers as a priority. Other CEO time priorities included improving efficiency in the organisation (62 per cent).

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