A record-breaking share of chief executive officers are optimistic about the economic environment worldwide, at least in the short term.
PwC’s 21st survey of almost 1,300 CEOs around the world found that 57 percent of the business leaders say they believe global economic growth will improve in the next 12 months. This is almost twice the level of last year and the largest ever increase since PwC began asking about global growth in 2012.
Optimism in global growth has more than doubled in the U.S. (59 percent) after a period of uncertainty surrounding the election last year. Brazil also saw a large increase from 38 percent to 80 percent of chief executives who are optimistic global growth will improve.
And even among the less optimistic countries such as Japan and the U.K., the positive outlook for global growth has more than doubled since last year.
“CEOs are optimistic because there are tangible signals in the global economy that opportunity abounds,” says Graeme Sunley, PwC Cayman leader. “Most of the world’s major economies are experiencing positive growth in contrast to the case just a few years ago. In the Cayman Islands, we should look forward with optimism to the significant role that Cayman will play in this global growth story.”
Impact of technology on employment and skills a concern
The impact of automation and artificial intelligence on jobs and employee retention is becoming a critical issue for business leaders, the survey shows.
Two thirds of CEOs believe they have a responsibility to retrain employees whose roles are replaced by technology, particularly in the engineering and construction (73 percent), technology (71 percent) and communications (77 percent) sectors.
Anticipated job losses as a result of automation and digitalization are especially high in the financial services sector with 24 percent of banking, capital markets and insurance CEOs planning workforce reductions.
“Governments, communities, and businesses need to truly partner to match talent with opportunity, and that means new approaches to educating students and training workers in the fields that will matter in a technology-enabled job market,” advises Sunley. “It also means encouraging and creating opportunities for the workforce to retrain and learn new skills throughout their careers.”
Confidence in short-term revenue growth on the rise
This optimism in the economy is fuelling CEO confidence about their own companies’ outlook, although the uptick is small. About 42 percent of chief executives are “very confident” in their own organisation’s growth prospects over the next 12 months, up from 38 percent last year.
North America is the only region where a majority of CEOs are “very confident” about their own 12-month prospects. This confidence in the U.S. market extends overseas, with non-U.S.-based CEOs once again voting it the top market for growth in the next 12 months, followed by China. Germany remains in third place, followed by the U.K. in fourth place, while India bumps Japan as the fifth most attractive market in 2018.
The top three most confident sectors for their own 12-month prospects this year are technology (48 percent “very confident”), business services (46 percent) and pharmaceutical and life sciences (46 percent).
For most executives (54 percent), expectations for short-term revenue growth are translating into jobs growth, as only 8 percent of CEOs expect to reduce their head count.
Healthcare (71 percent), technology (70 percent), business services (67 percent), communications (60 percent), and hospitality and leisure (59 percent) are the industry sectors with the highest demand for new recruits.
However, 22 percent of CEOs express doubts about the availability of key digital skills in the workforce.
CEOs see geopolitical threats
Despite the widespread economic optimism, there are also concerns about a range of business, social and economic threats.
CEOs are “extremely concerned” about geopolitical uncertainty (40 percent), cyber threats (40 percent), terrorism (41 percent), availability of key skills (38 percent), and populism (35 percent).
These threats outpace familiar concerns about business growth prospects such as exchange rate volatility (29 percent) and changing consumer behavior (26 percent).
The threat of over-regulation remains the top concern for CEOs (42 percent extremely concerned), and over a third (36 percent) remain concerned about an increasing tax burden.
Meanwhile, chief executives “are divided over whether future economic growth will benefit the many or the few,” PwC said. “They see the world moving towards new, multifaceted metrics to measure future prosperity.”
Asked whether globalization has helped close the gap between the rich and the poor, nearly 40 percent of CEOs responded “not at all,” whereas 30 percent said globalization had not helped “avert climate change and resource scarcity.” And more than one in four CEOs say that globalization has not helped improve the “integrity and effectiveness of global tax systems.”