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25 June, 2024

PWC survey: Seven out of ten CEOs are pessimistic about 2023

73% expect global economic growth to slow; what steps are they expected to take to ensure business sustainability?

The results for CEOs in Cyprus will be presented in March.

According to the 26th Annual Global CEO Survey conducted by PwC between October and November 2022, nearly three-quarters (73%) of respondents expect global economic growth to slow over the next 12 months.

This bleak outlook is the most pessimistic CEOs have ever expressed about global economic growth since we first asked this question 12 years ago, and it represents a significant shift from the optimistic outlook in 2021 and 2022 when more than two-thirds of respondents (76% and 77%, respectively) expected growth rates to improve.

Almost 40% of CEOs believe that their company will no longer be financially viable in a decade

In addition to the challenging conditions, nearly 40% of CEOs believe that if their organization continues to operate in the same manner, it will no longer be financially viable in a decade. CEO optimism about their own company's growth prospects is also down significantly (-26%), the largest drop since the 2008-2009 financial crisis when the corresponding figure was 58%.

Globally, business optimism about economic growth varies sharply, with G7 economies such as France (70% vs. 63%), Germany (94% vs. 82%), and the United Kingdom (84% vs. 71%), which are feeling the effects of the ongoing energy crisis, appearing more pessimistic about domestic growth prospects than the global economy.

CEOs are most concerned about inflation, macroeconomic instability, and geopolitical conflicts

While cyber and healthcare risks were top concerns a year ago, the impact of the economic downturn dominates this year, with inflation (40%) and macroeconomic instability (31%) listed as the top risks on CEOs' minds, both in the short term - the next 12 months - and over a five-year horizon. This is closely followed by a 25% share of CEOs who feel financially exposed to the risks of geopolitical conflicts, while cyber risks (20%) and climate change (14%), in relative terms, are declining.

The war in Ukraine, as well as growing concern about geopolitical flashpoints in other parts of the world, have forced CEOs to reconsider aspects of their business models, with nearly half of those exposed to geopolitical conflict now incorporating a broader range of disruptions into their scenario planning and business operating models, as well as increasing investment in cybersecurity or data protection (48%).

CEOs are cutting costs but not staff or pay

CEOs are looking to cut spending while increasing revenue in response to the current economic climate. 52% of respondents report lowering operating costs, 51% raising prices, and 48% diversifying their product and service offerings. However, more than half (60%) do not plan to reduce their organizations' workforce in the next year. Meanwhile, the vast majority (80%) say they have no plans to reduce pay in order to retain talent and reduce staff turnover.

The ongoing significance of trust and transformation in generating long-term value

CEOs emphasized the importance of collaborating with a diverse range of stakeholders to build trust and achieve long-term value for society. According to the survey, the areas in which organizations are developing partnerships with non-business entities are sustainable development (54%), diversity, equality, and inclusion (49%), and education (49%).

In terms of technology, nearly two-thirds (76%) of organizations say they are investing in automating processes and systems, 72% are implementing systems to upgrade human resource skills in priority areas, and 69% are developing technologies such as cloud computing, artificial intelligence, and other advanced technologies.

Many CEOs, however, question whether their companies are meeting critical requirements for managing increasingly complex risks. Only 23% of CEOs, for example, say that their company's leaders frequently/usually make strategic decisions about their responsibilities without consulting the CEO. Furthermore, only 46% of CEOs believe that their company's leaders frequently/usually show tolerance for minor failures. On the plus side, nearly 9 in 10 respondents (85%) say that their employees' behaviors are frequently or usually aligned with their organization's values and orientation.

PwC International President Bob Moritz concludes:

"Organizations and society cannot address today's threats in isolation. To effectively mitigate these risks, build trust, and create long-term value for their businesses, society, and the planet, CEOs must continue to collaborate with a diverse range of stakeholders from the public and private sectors."

Cypriot CEOs

PwC Cyprus will present its 12th local survey as part of the global survey during a special event in March 2023. The survey attracted 159 CEOs, indicating the growing interest of the business community.

[This article was translated from its Greek original]

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