- In every region across the world, CEOs predict slower economic growth 
- Confidence in companies' own revenue growth lowest since 2009 
- Uncertain economic growth joins over-regulation and trade conflicts as a top
  three threat

As we enter a new decade, CEOs are showing record levels of pessimism in the 
global economy, with 53% predicting a decline in the rate of economic growth in 
2020. This is up from 29% in 2019 and just 5% in 2018 – the highest level of 
pessimism since we started asking this question in 2012. By contrast, the 
number of CEOs projecting a rise in the rate of economic growth dropped from 
42% in 2019 to only 22% in 2020.  These are some of the key findings of PwC's 
23rd survey of almost 1,600 CEOs from 83 countries across the world, launched 
today at the World Economic Forum Annual Meeting in Davos, Switzerland.

CEO pessimism over global economic growth is particularly significant in North 
America, Western Europe and the Middle East, with 63%, 59% and 57% of CEOs from 
those regions predicting lower global growth in the year ahead.

"Given the lingering uncertainty over trade tensions, geopolitical issues and 
the lack of agreement on how to deal with climate change, the drop in 
confidence in economic growth is not surprising – even if the scale of the 
change in mood is," said Bob Moritz, Chairman, of the PwC Network. "These 
challenges facing the global economy are not new – however the scale of them 
and the speed at which some of them are escalating is new, the key issue for 
leaders gathering in Davos is: how are we going to come together to tackle 
them." 

"On a brighter note, while there is record pessimism amongst business leaders, 
there are still real opportunities out there. With an agile strategy, a sharp 
focus on the changing expectations of stakeholders, and the experience many 
have built up over the last ten years in a challenging environment, business 
leaders can weather an economic downturn and continue to thrive."

CEO confidence in own revenue growth declines 

CEOs are also not so positive about their own companies' prospects for the year 
ahead, with only 27% of CEOs saying they are  "very confident" in their own 
organisation's growth over the next 12 months – the lowest level we have seen 
since 2009 and down from 35% last year.  

While confidence levels are generally down across the world, there is a wide 
variation from country to country, with China and India showing the highest 
levels of confidence among major economies at 45% and 40% respectively, the US 
at 36%, Canada at 27%, the UK at 26%, Germany at 20%, France 18%, and Japan 
having the least optimistic CEOs with only 11% of  CEOs very confident of 
growing revenues in 2020.

When asked about their own revenue growth prospects, the change in CEO 
sentiment has proven to be an excellent predictor of global economic growth. 
Analysing CEO forecasts since 2008, the correlation between CEO confidence in 
their 12-month revenue growth and the actual growth achieved by the global 
economy has been very close (see exhibit4 in notes). If the analysis continues 
to hold, global growth could slow to 2.4% in 2020 below many estimates 
including the 3.4% October growth prediction from the IMF.

China looks beyond the US for growth

Overall the US just retains its lead as the top market CEOs look to for growth 
over the next 12 months at 30%, one percentage point ahead of China at 29%.  
However, ongoing trade conflicts and political tensions have seriously dented 
the attractiveness of the US for China CEOs.  In 2018, 59% of China CEOs 
selected the US as one of their top three growth markets, in 2020 this has 
dropped dramatically to just 11%. The US loss has been Australia's gain, with 
45% of China CEOs now looking to Australia as a top three key growth market 
compared with only 9% two years ago.

The other countries making the top five for growth are unchanged from last year 
– Germany (13%), India (9%) and the UK (9%). A strong result for the UK given 
the uncertainty created by Brexit. Australia is just outside the top five 
boosted by its increased attractiveness for China CEOs.

Worries about uncertain economic growth on the rise

In 2019 when asked about the top threats to their organisation's growth 
prospects, uncertain economic growth ranked outside the top ten concerns for 
CEOs at number twelve. This year it has leapt to third place, just behind trade 
conflicts – another risk that has risen up the CEOs agenda – and the perennial 
over-regulation, which has again topped the table as the number one threat for 
CEOs.  

CEOs are also increasingly concerned about cyber threats and climate change and 
environmental damage, however despite the increasing number of extreme weather 
events and the intensity of debate on the issue, the magnitude of other threats 
continues to overshadow climate change which still does not make it into the 
CEOs' top ten threats to growth.

Policing cyberspace

While CEOs around the world express clear concerns about the threat of 
over-regulation, they are also predicting significant regulatory changes in the 
technology sector. Globally over two-thirds of CEOs believe that governments 
will introduce new legislation to regulate the content on both the internet and 
social media and to break up dominant tech companies. A majority of CEOs (51%) 
also predict that governments will increasingly compel the private sector to 
financially compensate individuals for the personal data that they collect.  

However, CEOs are in two minds as to whether governments are striking the right 
balance in designing privacy regulation between increasing consumer trust and 
maintaining business competitiveness, with 41% saying it does strike the right 
balance and 43% saying it doesn't.

The upskilling challenge

While the shortage of key skills remains a top threat to growth for CEOs and 
they agree that retraining/upskilling is the best way to close the skills gap, 
they are not making much headway in tackling the problem with only 18% of CEOs 
saying they have made "significant progress" in establishing an upskilling 
programme.  This sentiment is echoed by workers. In a separate survey by 
PwC[https://www.pwc.com/gx/en/news-room/press-releases/2019/global-skills-survey
-2019.html], 77% of 22,000 workers around the world say they would like to 
learn new skills or retrain but only 33% feel they have been given the 
opportunity to develop digital skills outside their normal duties.

"Upskilling will be one of the key issues discussed this week at Davos and 
business leaders, educators, government and civil society must work together to 
ensure that people around the world stay productively engaged in meaningful and 
rewarding work. Leaders have a key role to play; although people may have fears 
about the future, they want to learn and develop and they are looking to 
leaders to provide a trusted path forward," added Bob Moritz.

Climate change – challenge or chance?

Although climate change does not appear in the top ten threats to CEOs' growth 
prospects, CEOs are expressing a growing appreciation of the upside of taking 
action to reduce their carbon footprint. Compared to a decade ago, when we last 
asked this question, CEOs are now twice as likely to "strongly agree" that 
investing in climate change initiatives will boost reputational advantage (30% 
in 2020 compared with 16% in 2010) and 25% of CEOs today compared with 13% in 
2010 see climate change initiatives leading to new product and service 
opportunities for their organisation.  

While views of climate change driven product and service opportunities have 
remained relatively stable in the US and the UK, there has been a dramatic 
shift in views in China over the last ten years. In 2010, only 2% of China CEOs 
saw climate change leading to opportunities whereas in 2020 this has risen to 
47%, by far the largest increase of CEOs in any country included in the 
survey.  However, for these opportunities to turn into long term success 
stories the principles of climate change need to be embedded right across a 
businesses' supply chain and customer experience.

Notes:

Download the report at ceosurvey.pwc. Video footage from the launch of the 
Global CEO Survey in Davos and other media materials are available at: 
press.pwc.com

PwC conducted 1,581 interviews with CEOs in 83 countries between September and 
October 2019. Our sample is weighted by national GDP to ensure that CEOs' views 
are fairly represented across all major regions. 7% of the interviews were 
conducted by telephone, 88% online, and 5% by post or face-to-face. All 
quantitative interviews were conducted on a confidential basis. 46% of 
companies had revenues of $1 billion or more; 35% of companies had revenues 
between $100 million and $1 billion; 15% of companies had revenues of up to 
$100 million; 55% of companies were privately owned.

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Source: PwC