One year after COVID-19 was declared a pandemic, CEOs are voicing record levels of optimism in global economic recovery, with 76% of global business leaders predicting an improvement in global GDP in 2021, according to PwC’s 24th Annual Global CEO Survey.
“After a year of uncertainties and economic difficulties during which they had to rethink their activity, the CEOs are very confident in economic growth. Although the health crisis remains the top threat, the percentage of optimistic respondents in this edition of the CEO Survey is the highest it has been in recent years. For example, in 2020, only 22% estimated a positive outlook for the economy, and 42% had such expectations in 2019. However, there are also a number of concerns. One I noticed refers to the volatility of fiscal policies which, influenced by rapidly accumulating public debt due to the pandemic, could lead to increased taxes in the short term”, said Ionuț Simion, Country Managing Partner, PwC Romania.
There is confidence that companies’ revenues will increaseRead more aboutDoina Bîrsan promoted as Partner in Assurance Services at PwC Romania read more
CEOs are more optimistic about the outlook for their businesses. Some 36% of those polled said they are “very confident” about their organisation’s prospects for revenue growth over the next 12 months, up from 27% of CEOs in 2020.
While global confidence is up, there is wide variation across industries, reflecting the varying degrees to which consumer behaviour has been affected by the pandemic. CEOs in the technology and telecommunications sectors show the highest levels of confidence, at 45% and 43%, respectively. CEOs in the transportation and logistics (29%), hospitality and leisure (27%) sectors are among the least confident about their ability to grow revenues over the next 12 months.
Worries about cyber threats, tax policies and misinformation on the rise
Not surprisingly, pandemics and health crises top the list of threats to growth prospects, having overtaken the fear of over-regulation, which has been the number one concern for CEOs globally since 2014.
Rising digitalisation is increasing the risks posed by cyber threats. Coupled with the significant increase in cybersecurity incidents in 2020, including ransomware attacks, that has resulted in cyber threats leaping up the list to become the number two concern, as cited by 47% of CEOs, compared with 33% in 2020. When asked about their spending on digital transformation, nearly half of the CEOs (49%) project increases of 10% or more.
Another topic rising rapidly up the list of CEO concerns is the spread of misinformation (at 28%, up from 16% in 2020), which has had an impact on elections, reputations and public health – further contributing to a decline in trust across society.
In 2020, tax policy uncertainty ranked outside the top ten concerns for CEOs, with only 19% of CEOs reporting concerns. This year, it has increased rapidly in importance, leaping up to seventh place (31%), with CEOs undoubtedly watching government debts accumulate and realising that business taxes will likely need to rise.
Climate change still only ranks ninth in CEOs’ perceived threats to growth. The percentage of CEOs expressing concerns about climate change has risen from 24% in 2020 to 30% in 2021.
The US extends its lead over China as the top destination for growth
The survey findings show that the US has extended its lead as the number one market that CEOs are looking to for growth over the next 12 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 had an impact on the views of US CEOs. They are reducing their emphasis on China as a growth driver and increasing their focus on Canada and Mexico. In 2020, US CEOs’ interest in the latter two countries rose by 78%. Meanwhile, China CEOs report growing interest in large economies such as the US, Germany and Japan — prime destinations for exports.
At 17%, Germany holds on to its number three spot on the list of growth destinations, while the UK, post-Brexit, moves up to number four (11%), surpassing India (8%). Japan has also risen up the ranking to become the sixth most attractive growth destination, overtaking Australia, which held that position last year.
PwC surveyed 5,050 CEOs in 100 countries and territories, including Romania, in January and February 2021.
The global report will be released on 11 March during a virtual event hosted by CNBC Catalyst.
