PwC: CEO Optimism “Hits 10-Year High”
Optimism among global CEOs has hit a new high, according to PwC’s annual Global CEO Survey, as “more than three-quarters of CEOs predict the global economy will improve.”
A spokesperson said, “More than three-quarters of CEOs, 77%, predict the global economy will improve, while only 15% expect worsening conditions. CEO optimism for 2022 is a tick higher than the 76% optimism level from a year ago and fully 54 points higher than 2020, when more than half [53%] of CEOs predicted a declining economy.
“These are findings from PwC’s 25th Annual Global CEO Survey, which polled 4,446 CEOs in 89 countries and territories between October and November 2021.
“More than half of CEOs also report high levels of confidence about their own prospects for revenue growth over the next 12 months. Among the CEOs expressing a more tepid outlook are those in the automotive sector [46%], grappling with semiconductor shortages, and in the hospitality and leisure sectors [44%], impacted by the lingering effects of the pandemic on travel.
“While there is general optimism among CEOs for economic growth in 2022, the perspective varies widely across individual countries and territories. Among the largest territories, optimism is highest in India, where 94% of CEOs anticipate global growth in the coming year, up from 88% last year. Optimism is also trending up solidly among CEOs in Japan [plus 16 points to 83%, from 67% last year], and is modestly higher in the UK [up five points to 82%].
“At the other end of the spectrum, CEO optimism about the global economy declined most notably in the US, down 18 points to 70%, and was also slightly down in Brazil [dropping seven points to 77%], China [down nine points to 62%] and Germany [down four points to 76%], perhaps as inflation and supply chain constraints became more of an issue.
“While US CEOs may be less sanguine on the global economy, they are comparatively confident about their own companies’ growth prospects, with 40% extremely confident about achieving revenue growth in 2022. India CEOs are similarly confident in their companies’ outlook.”
Arthur Wightman, Territory leader, PwC Bermuda, said, “The chief executives who responded to our 25th Annual Global CEO Survey display optimism about continued economic resilience, but they are also well aware of potential threats that could impact their organisations over the coming 12 months, including macroeconomic volatility, cyber and health risks.
“CEOs in financial services, in particular, are concerned about cyber threats.
“While threats such as climate change and social inequality are further down the list, it is critical not to lose focus on these more long-term issues as they will define what sort of world we live in and hand down to the next generation. Environmental, financial and societal pressures are converging and today’s leaders must solve a new equation.
“Most upbeat of all for the coming year are CEOs of private equity firms – 67% of whom are highly confident about their company’s growth, and also technology firms [64%] and insurers [63%]. Optimism in the insurance industry reflects better expected financial performance from continued rate hardening and global economic recovery.
“The insurance and reinsurance sector’s resilience has been a bright light in Bermuda’s economy. The continuing hard market and investor appetite for reinsurance is supporting further capital inflows in 2022. The life reinsurance, captives, ILS and legacy sectors are all showing buoyancy.
“Unsurprisingly, CEOs in the hospitality and leisure sector are the least optimistic about the coming year as they continue to grapple with the devastating effects of the pandemic. As a tourism dependent economy Bermuda has faced an unprecedented shock emphasizing the importance of mitigating the socio-economic impacts on the lives this sector sustains.
“Innovative tourism strategies are required to rebound as the pandemic moves to endemic status and competing jurisdictions throw open their doors. Similarly, the country needs more economic diversification to better weather such shocks in the future.”
Bob Moritz, Global Chairman, PwC said, “While the ongoing pandemic and emergence of new variants cast a shadow over the year, the high level of CEO optimism we found speaks to the strength and resilience of the global economy and the ability of CEOs to manage through uncertainty. There is nothing “normal” about the world we are working in, but we are getting used to it.
“We are seeing differences in confidence among countries, and there is no shortage of challenges to navigate, but it is encouraging that CEOs we spoke with on the whole feel positive about 2022.”
The spokesperson said, “Similar to last year, cyber and health risks rank as the leading global threats, identified by 49% and 48% of CEOs, respectively. Not far behind is macroeconomic volatility, with 43% of CEOs either very or extremely concerned about the potential impact of inflation, fluctuations in GDP and labour market issues in the coming year.
“Another major underlying concern is the ability to attract and retain talent – 69% of CEOs concerned about social inequality risks cite this as an impact, as do 62% of CEOs concerned about health risks.
“From an industry perspective, cyber risks are top of mind for financial services CEOs, 59% of whom cited cyber as a key threat. Notably, manufacturing [40%] and consumer [39%] CEOs displayed lower concern levels about cyber, despite those sectors’ high volume of cyber attacks. It bears watching to see if this relative level of complacency reverses itself over the coming year.
“Understandably, a high percentage of hospitality and leisure CEOs [75%] are concerned about the impact of health risks on their business. And 49% of energy, utility and resource CEOs see climate change as a key threat in the coming year,15 points higher than the percentage across all industries.
“Concern over the ability to attract and retain talent is strongly linked in CEOs’ minds with health risks and social inequality. 59% of Insurance CEOs and 76% of Hospitality CEOs think Social Inequality will inhibit their company’s ability to attract and retain key skills and talent over the next 12 months.”
Bob Moritz said, “Through 25 years of the Global CEO Survey, we’ve seen CEOs tackle challenges from the bursting of the dot-com bubble to the global financial crisis. Today, new challenges with the global pandemic and climate change are testing CEOs like never before. Yet, no matter the issue or year, one constant we see is the fundamental importance of establishing trust.
“This year, trust appears linked to everything from CEOs’ confidence in growing revenues to whether their organisation has made a net-zero commitment. Looking ahead, while there will certainly be unpredictable circumstances and challenges over the next 25 years, we believe companies built on a strong foundation of trust will be fortified and their CEOs best positioned to deliver sustained outcomes that contribute to long-term success.”
