As executives gather in Davos, the mood may not be a cheery as it has been in the past decade. While over-regulation still remains a top concern for the C-suite, according to PwC’s 23rd annual survey of CEOs, trade conflicts, uncertain economic growth and cybersecurity have risen to the top of the list as well.
Fifty-three percent of global CEOs, the most in a decade, stated they believed global growth would decline over the next 12 months, according to the report, Navigating the Rising Tide of Uncertainty. Only 22% said it would improve. In the United States, the viewpoint is even gloomier, with 62% seeing a decline while only 9% predicting an improvement.
Despite this predicted downturn, many U.S. CEOs see revenue growth for their own firms not declining as fast, and are more likely to be “very confident” in near-term revenue growth than peers globally (36% vs. 27%). However, this viewpoint has dropped dramatically since 2018, when 52% were “very confident” of revenue growth, versus 42% globally. As the survey noted, the confidence level hasn’t been this low since 2009.
PWC also stated that more than half of U.S. CEOs would rely on mergers and acquisitions for growth, while that number dropped to 35% globally. Further, 83% of U.S. CEOs are “doubling down on operational efficiencies,” relying on artificial intelligence and cloud-enabled tech services for growth, while fewer said they were relying on new products and services to drive growth. More specifically, the report states that artificial intelligence, blockchain, “Internet of Things,” virtual reality, 3D printing and combinations of these are viewed as cost-cutting and revenue-generating opportunities.
“On the global level, tensions between the great powers have created uncertainty,” Felipe Bayón, CEO, Ecopetrol in Colombia, told PWC. “These are geopolitical issues too. Some would say we are in a ‘deceleration trend,’ especially in terms of demand, which hits us directly. What does it mean? That we must be efficient in order to grow.”
However, the downside of this is 53% are “extremely concerned” about the effects of cyberthreats to growth prospects. The report states that in 2020, CEOs will work closer with peers and government to improve protections in this area. Looking beyond 2020, 66% of CEOs in North America believe that government legislation will splinter the internet relating to content, commerce and privacy.
John Hennessy, chairman of Alphabet US, told PWC he saw some “tone deafness” from the tech industry, which originally developed in an effort to aid industry. “Now we build products that everybody uses and that affects their lives every single day,” he said. “That comes with a whole new set of responsibilities. And whether it’s privacy, cybersecurity, dealing with hate speech and walled gardens … we’re not where we need to be,” he said.