Technology NewsLeaders have not seen global economic opportunities in such...

Leaders have not seen global economic opportunities in such a pessimistic way for a long time

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In this challenging environment, nearly 40% of CEOs believe their company will not be economically viable a decade from now if it continues on its current path.

73% of CEOs say the pace of economic growth worldwide will slow over the next 12 months. Despite this, the majority (60%) do not plan to reduce staff and a significant part (80%) would not reduce the remuneration of employees. High inflation and macroeconomic volatility top the list of global threats. Among the strategic plans for 2023 is the reduction of emissions and the mitigation of climate risks arising from the operations of companies – according to PwC’s 26th Global CEO Survey.
The opinion of CEOs regarding global economic growth is the most pessimistic so far compared to the expectations of recent years and differs significantly from the optimistic outlook for 2021 and 2022, when more than two-thirds (76% and 77%, respectively) believed that the pace of economic growth will improve in the year ahead. THE In PwC’s 26th Global CEO Survey 4,410 CEOs from 105 countries and geographies participated at the end of 2022.

“The CEOs, who are just taking a breather from the pressure caused by the Covid-19 pandemic, now have to cope in an extremely volatile, unpredictable economic and geopolitical environment, which is further aggravated by record-high inflation and the energy crisis affecting Europe. As a result, the leaders who are constantly facing new difficulties are understandably gloomy about the 2023 economic about their outlook, nearly three-quarters of them forecast a decline in the rate of economic growth. In preparation for this, most of them are primarily busy with increasing current operational performance, while fewer resources are left to develop the business in line with future needs. For the long-term survival of companies, the training of employees and the development of technological transformation programs remains key,” summarizes the main findings of the global survey, Barbara Koncz, partner in the tax department of PwC Hungary.

Faith in one’s own company has decreased

In this challenging environment, nearly 40% of CEOs believe their company will not be economically viable a decade from now if it continues on its current path. This trend can be seen in many sectors, including telecommunications (46%), manufacturing (43%), healthcare (42%) and technology (41%). The CEOs’ confidence in their own company’s growth prospects has also dropped dramatically compared to last year (-26 percentage points): the largest drop since the 2008-2009 financial crisis, when a 58 percentage point drop was measured.

Leaders in France, Germany and the UK are less optimistic about domestic growth compared to global growth, compared to leaders in, for example, the US, Brazil, India and China.
CEOs see several immediate challenges to their industry’s profitability over the next ten years. More than half (56%) of executives surveyed believe that changing consumer preferences will impact profitability, as will regulatory changes (53%), labor/skills shortages (52%) and technology disruption (49%) ).

Inflation and macroeconomic volatility: these are the main concerns of CEOs

While a year ago cyber and health risks caused the most concern, this year the effects of the economic downturn are preoccupying CEOs: inflation (40%) and macroeconomic volatility (31%) lead in the short term – over the next 12 months – and the list of risk factors for the next five years as well. Furthermore, 25% of the number one decision makers feel financially exposed to the risks of geopolitical conflicts, while the importance of cyber risks (20%) and climate change (14%) has decreased somewhat.

Managers would avoid downsizing and reducing benefits

In response to the current economic environment, CEOs are looking to cut costs and drive revenue growth. More than half of CEOs (52%) reported reducing operating costs, while 51% reported raising prices and 48% diversifying product and service offerings. At the same time, more than half of company managers (60%) claim that they do not plan to reduce the number of employees in the next 12 months. And the vast majority (80%) indicated that they do not plan to reduce employee compensation in order to retain talent and reduce labor migration.

Addressing climate risks is increasingly a priority

Although climate change did not feature as prominently as other near-term global threats, CEOs say climate risk continues to affect their cost profiles (50%), supply chains (42%) and physical assets (24%). Chinese CEOs feel particularly at risk, with 65% saying climate change could affect their cost profile, 71% saying their supply chain, and 56% saying their physical assets. Recognizing the long-term business and social impact of climate change, the majority of CEOs have already implemented – or are currently implementing – initiatives to reduce their company’s emissions (65%). In addition, most executives have developed new climate-friendly products and processes (61%) and developed a data-driven, company-wide strategy to reduce emissions and mitigate climate risks (58%).

Finding a balance between short-term and long-term goals

The survey also touched on what kind of investments company managers are focusing on in the next year. Based on the answers, it can be seen that managers primarily spend resources on the automation of processes and systems (76%), on the introduction of systems for further training of the workforce in priority areas (72%), and on the implementation of technologies such as artificial intelligence, cloud-based and other advanced technologies (69%).

Oscillating between short-term interests and the demands of long-term transformation, CEOs currently spend more time improving their company’s current operational performance (53%) than developing the business and its strategy for future needs (47%).

“The risks that threaten organizations and society today cannot be managed alone and in isolation. Leaders must therefore continue to work together with a wide range of public and private stakeholders to effectively reduce these risks, build trust and create long-term value – the for their business, society and the world,” emphasized Bob Moritz, global head of PwC.

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