A year after COVID-19 was declared a pandemic, CEOs are expressing record levels of optimism in the global economic recovery, with 76% of global business leaders predicting that economic growth will improve in 2021.
The figures were obtained from PwC’s 24th Annual Global CEO Survey, which this year surveyed 5,050 CEOs in 100 countries and territories in January and February 2021.
The percentage of CEOs expressing confidence in growth increased from 22% in 2020 and 42% in 2019, representing the highest level of optimism since the survey started asking this question in 2012.
Optimism among CEOs about global economic growth is particularly strong in North America and Western Europe, with 86% and 76% of CEOs, respectively, from these regions predicting improved global growth in the coming year.
“After a year of human tragedy and great economic difficulties, it is encouraging to see that the people responsible for investment and hiring decisions feel optimistic, cautiously, about the coming year. CEOs believe that growth will return, driven for the rapid development of vaccines and their distribution in many parts of the world, “said Bob Moritz , president of the PwC network.
“During the troubled past year, CEOs had to rethink and reconfigure what they do and how they do it, while dealing with stretched balance sheets and supporting employees who were forced to face these extraordinary circumstances.
“CEOs now face two fundamental challenges: first, how to build trust with a wide range of stakeholders, whose business expectations are higher than ever; and second, how to adapt their business and produce consistent results in a rapidly changing external environment. The companies that fix this will be in a better position to get out of the pandemic as strong, resilient and productive companies, capable of withstanding future shocks. ”
CEOs’ confidence in revenue growth returns to long-term average
CEOs are more optimistic about their business outlook. About 36% of respondents said they are “very confident” about their company’s revenue growth prospects over the next twelve months, compared with 27% of CEOs in 2020.
Although global confidence has increased, there is wide variation across sectors, reflecting the different degrees in which consumer behavior has been impacted by the pandemic. CEOs in the technology and telecommunications sectors show the highest levels of confidence at 45% and 43%, respectively. Meanwhile, CEOs in the transport and logistics (29%) and hospitality and leisure (27%) sectors are among the least confident about their ability to increase revenues in the next twelve months.
USA extends its leadership over China as the main growth destination
The survey results show that the US has increased its leadership as the number one market that CEOs expect to grow over the next twelve months at 35%, seven percentage points ahead of China at 28%. In 2020, the US was only one percentage point ahead of China .
New political developments and existing tensions have impacted the opinions of US CEOs. They are reducing the emphasis on China as a growth driver and increasing the focus on Canada and Mexico; compared to 2020, the interest of US CEOs in the last two countries increased by 78%. Meanwhile, China’s CEOs report growing interest in major economies such as the United States, Germany and Japan, the main export destinations.
With 17%, Germany maintains its third place in the list of growth destinations, while the United Kingdom, post-Brexit, rises to the fourth place (11%), surpassing India (8%). Japan also rises in the ranking and becomes the sixth most attractive growth destination, surpassing Australia, which occupied that position last year.
In the year of COP26 , climate change is still not being considered urgently
The percentage of CEOs expressing concern about climate change has increased from 24% in 2020 to 30% in 2021. This represents only a small increase in the context of COP26 , which is being held this year in Glasgow , United Kingdom. The discovery also comes in the context of growing anxiety about almost all types of threats.
Climate change is still only ninth among the threats to growth perceived by CEOs. In addition, another 27% of CEOs report being “not at all concerned” or “not at all concerned” about climate change. This may be because climate change is not seen as an immediate threat to growth compared to other issues, such as the pandemic, over-regulation and cyber threats.
Meanwhile, 39% of CEOs believe their company needs to do more to “measure” its environmental impact. And 43% believe that their companies need to do more to “report” about it, a larger share than any other area of ​​disclosure. This is encouraging, given that more and better corporate information on environmental impact is critical to driving the change needed to achieve a net zero economy.
However, 60% of CEOs have not yet incorporated climate risks into their strategic risk management activities, which is worrying given that climate change represents a growing physical and transitory risk for businesses. At the national level, CEOs in countries with high exposure to natural disasters, such as India and China , are among the least prepared for the risks of climate change.
While 23% of CEOs plan to significantly increase investments in sustainability initiatives as a result of COVID-19, almost a third of CEOs are not planning on changes.
Bob Moritz said: “To face the greatest challenges that our world faces today, we need to change the incentives that drive decision-making. This requires that financial markets have a broader view of value, in addition to the unique financial return and value of short-term, for capital to circulate to the right places. Better and comparable corporate non-financial reporting is also crucial, so that stakeholders can see how companies are creating value for society and for our planet, as well as to achieve your financial goals. Companies that fix this will improve their brand and build trust with their stakeholders. ”
Concerns about cybernetics, fiscal policies and misinformation are on the rise
Unsurprisingly, pandemics and health crises [1] top the list of threats to growth prospects, overcoming the fear of over-regulation, which has been the number one permanent concern for CEOs since 2014.
Increasing digitization is increasing the risks posed by cyber threats. This, coupled with the significant increase in cyber security incidents in 2020, including ransomware attacks, resulted in cyber threats that jumped off the list and became the number two concern, cited by 47% of CEOs compared to 33% in 2020. Cyber ​​threats are of particular concern to CEOs in North America and Western Europe, where they are considered a greater threat than the pandemic.
Also rising rapidly on the list of CEO concerns is the spread of misinformation (28%, against 16% in 2020), which had an impact on elections, reputation and public health, further contributing to a drop in confidence across society.
In 2020, fiscal policy uncertainty was out of the top ten concerns of CEOs, with only 19% of CEOs involved. This year, its importance has grown rapidly, jumping to seventh place (31%), with CEOs undoubtedly watching the accumulation of government debts and realizing that corporate taxes are likely to need to increase.
Digital investments for the future
Asked about their spending on digital transformation, almost half of CEOs (49%) project increases of 10% or more. Despite the growing level of concern that CEOs are expressing about cyber attacks, this has not translated into definitive action. Less than half of CEOs who plan to increase digital investments are also planning to increase their spending on cybersecurity and data privacy by 10% or more.
At the same time, an increasing number of CEOs (36%) intend to employ automation and technology to make their workforce more competitive, which represents more than double the share of CEOs who said the same in 2016.
Bob Moritz added: “When we reach the one-year mark of the pandemic, we are at an inflection point as vaccination begins to increase worldwide. Although the form of recovery is still unknown, it is clear that we cannot just go back to achieve the kind of change needed, CEOs will need to think differently and constantly evaluate their decisions and actions in relation to the broader social impacts. In doing so, they will establish a course that will generate confidence and deliver results sustainable for shareholders, society and our planet. “
