The Strategist

PwC: Top managers are not sure about bright future of global economy


01/22/2019 - 11:26



Almost 30% of business executives believe that there will be a slowdown in global economic growth over the next 12 months. This opinion is held by almost six times more respondents than last year (5%), which represents a record jump in pessimism.



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This is one of the main results of the 22nd PwC 21st Annual Global CEO Survey, which this time was attended by more than 1,300 people from all regions of the world. The report with results of the research has been presented at the World Economic Forum in Davos.

The most noticeable shift towards pessimism is observed among respondents from the United States, where the share of optimistic responses decreased compared with last year from 63% to 37%.

The decrease in the level of optimism among company executives also influenced expansion plans of organizations outside their countries. The United States retains leadership in the list of target markets with a slight lead: 27% of the global survey participants voted for the United States, while last year 46% of respondents chose this market. The second most attractive market for investment, China, also showed a decline in popularity from 33% last year to 24%.

In addition, the top five most attractive markets for expansion included Germany (13%, last year - 20%), India (8%, 9% - last year) and the United Kingdom (8% against 15% last year).

"The departure from the US market and reorientation of investments from China to other markets are a response to uncertainty associated with the ongoing trade dispute between the US and China," said Bob Moritz.

Only 35% of business executives expressed firm confidence in the growth prospects of their companies over the next 12 months, whereas last year their share was 42%.

In China, the level of confidence this year fell from 40% to 35% due to trade conflicts, introduction of tariffs in the United States and weakening of the industry. As a result of current trade conflicts with the United States, Chinese company leaders diversified their choice of expansion markets, and only 17% of respondents voted for the US, whereas last year 59% of respondents considered this market attractive.

In the US, the level of confidence fell from 52% to 39% due to trade conflicts. In Germany, this figure fell from 33% to 20% due to slowdown in the economy and problems associated with tBrexit.

To increase revenue this year, the executives plan to rely mainly on increased operational efficiency (77%) and organic growth (71%).

88% of survey participants who responded that they are “deeply concerned” with trade conflicts are most concerned about trade issues between China and the United States. 98% of executives in the United States and 90% of executives in China reported their concerns about these issues.

Majority of respondents from China, who are deeply concerned about trade conflicts, are actively reacting to the changes: 62% adjust their supply chain and procurement strategy, 58% reorient their growth strategy to other countries.

source: livemint.com




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