A record-breaking share of CEOs are optimistic about the economic environment worldwide, at least in the short term. That’s one of the key findings of PwC’s 21st survey of almost 1,300 CEOs around the world, launched today at the World Economic Forum Annual Meeting in Davos.
57 percent of business leaders say they believe global economic growth will improve in the next 12 months. That's almost twice the level of last year (29%), and the largest ever increase since PwC began asking about global growth in 2012.
Optimism in global growth has more than doubled in the US (59%) after a period of uncertainty surrounding the election (2017: 24%). Brazil also saw a large increase in the share of CEOs who are optimistic global growth will improve (+38% to 80%). And even among the less optimistic countries such as Japan (2018: 38% vs. 2017: 11%) and the UK (2018: 36% vs. 2017: 17%), optimism in global growth has more than doubled since last year.
“CEOs’ optimism in the global economy is driven by the economic indicators being so strong. With the stock markets booming and GDP predicted to grow in most major markets around the world, it’s no surprise CEOs are so bullish,” said Bob Moritz, Global Chairman, PwC.
PwC's latest Global Economic Outlook projects Ireland to be the fastest growing Eurozone economy for 2018 through to 2024. The Irish economy is projected to show GDP growth of 3.5% in 2018 and average growth of 2.8% for the period 2020 to 2024. This compares to Eurozone average growth of 2.2% and 1.6% respectively for these periods.
Feargal O'Rourke, PwC Ireland Managing Partner, said: "Ireland's strong economic growth stems from continued investment and household consumption growth, as well as continuing FDI flows. This is boosted by a favourable business environment, decreasing unemployment as well as positive economic news in the Eurozone, which is expected to boost Irish exports.
The positivity in our PwC Global CEO report can only be good news for Ireland. A strong global economy will underpin the progress we have seen in recent years.
"However, in an unprecedented world of change, uncertainties do exist. Global tax reform together with the impact of the US tax overhaul is a priority on many Irish boardroom agendas. Uncertainties continue to loom around Brexit, and technological disruption will redefine how we work and live. We see companies tackling these challenges head-on as they continue to invest in their businesses and their people, building markets and using technology to innovate how they operate."
This optimism in the economy is feeding into CEOs’ confidence about their own companies’ outlook, even if the uptick is not so large. 42% percent of CEOs said they are “very confident” in their own organisation’s growth prospects over the next 12 months, up from 38% last year.
Looking at the results by country, it’s a mixed bag. CEOs’ outlook improved in several key markets, including Australia (up 4% to 46%) and China (up 4% to 40%).
In the US, CEOs’ confidence has recovered. After election nerves last year, the early focus on regulation and tax reform by the new administration has seen increased confidence in business growth prospects. This has grown from 39% in 2017 to 52% in 2018. And North America is the only region where a majority of CEOs are “very confident” about their own 12-month prospects.
In the UK, with Brexit negotiations only recently reaching a significant milestone, business leaders’ drop in short-term confidence is unsurprising (2018: 34% vs. 2017: 41%).
The top three most confident sectors for their own 12-month prospects this year are technology (48% “very confident”), business services (46%) and pharmaceutical and life sciences (46%). All three exceed the global “very confident” level of 42%.
Strategies for growth remain largely unchanged from last year’s findings. CEOs will rely on organic growth (79%), cost reduction (62%), strategic alliances (49%) and M&As (42%). There was a small increase in interest in partnering with entrepreneurs and start-ups (33% vs 28% last year).
CEO confidence in the US market extends overseas, with non-US based CEOs once again voting it the top market for growth in the next 12 months. This year, the US reinforces its lead on China (46% US vs 33% China, with the US lead over China up 2% compared with 2017). Germany (20%) remains in third place, followed by the UK (15%) in fourth place, while India bumps Japan as the fifth most attractive market in 2018.
“Even with high levels of global growth confidence, business leaders want and need safe harbours for investment to secure short-term growth,” comments Bob Moritz, Global Chairman, PwC. “Access to consumers, skills, finance and a supportive regulatory environment are reinforcing leading markets’ positions, for business leaders to achieve their short-term growth targets.”
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