If the annual survey of chief executives published by PwC is a reliable indicator, then 2014 should be a good year for business.
Davos: CEOs are moving out of survival and into growth mode
Davos is, above all, a celebration of the C Suite – the chairmen, chief executives and other top officials of the corporate world.
How these individuals see the world will determine the mood of the WEF annual meeting, and set the tone for the climate in global business for the rest of the year.
Last year, they left the meeting with a feeling that the glass was half-empty. Recovery from the financial crisis was undoubtedly under way, but was “fragile and timid”, as one global leader put it.
One of the rituals of the gathering is the annual unveiling, before the formal sessions begin, of the chief executives survey by the international accounting firm PwC. Based on a survey of 1,344 CEOs in 68 countries, this has been a consistently reliable barometer of the year ahead. If its findings this time, its 17th publication, prove reliable, 2014 will be a good year for business, perhaps the best since the global financial crisis and subsequent economic downturn.
The PwC survey finds that twice as many CEOs around the world believe the global economy will improve this year compared with 2013, with a chunky 39 per cent “very confident” that their revenues will grow. Only 7 per cent believe the global economy will decline.
Western Europeans are most confident of the upturn, as their economies emerge from the effects of the euro-zone debt crisis, but the Middle East is not far behind in positive thinking. Some 49 per cent of regional CEOs are confident of growth, and a sizeable proportion of those are in the sectors where bosses feel most upbeat: hospitality and leisure, retail and financial.
For the region, the immediate future looks positively rosy, according to the PwC report. Some 69 per cent of CEOs in the Middle East are confident of short-term revenue growth, substantially ahead of the next most positive region, Asia and Pacific.
As optimism about the world economy grows, the bosses’ worries have shifted slightly.
Whereas many last year were concerned about the macro-economic environment, this time they are overwhelmingly concerned about over-regulation and government fiscal deficits, especially in France, Australia, India and Germany.
In addition, some are worried about a possible slowdown in emerging market economies and increasing tax burdens. Nearly two-thirds of the PwC sample say the international tax system is in need of an overhaul; significantly, 75 per cent say that paying their “fair share” of tax is important for their company.
Apart from the questions about confidence and concerns, the survey also attempts to provide some feel for the long-term big issues that will change the business world. There are three things CEOs believe will transform their businesses in the next five years: technology, demographic fluctuations and global shifts in economic power.
These trends are not new, but business bosses are convinced that the pace of change in all three has accelerated, and this has the potential to change the business environment significantly.
The change could be most noticeable in the financial sector. One bank chief says: “Technology is an all-pervasive megatrend that is going to impact banking and revolutionise it.”
Demographic changes are going to have profound effects on business, the PwC survey finds. The working age population is shifting dramatically in the world’s biggest economies, for example. In two generations, China will have lost 150 million workers, while India will have gained 317 million, according to statistics cited in the survey. In 2050, Nigeria will have a bigger workforce than the United States, the survey says.
These are “seismic shifts”, in the words of PwC’s chairman Dennis Nally, who concludes: “Everything is now in flux.”
So it’s not surprising that workforce concerns are high on the chief executives’ list of priorities. Half want to hire more people in the coming year, but two-thirds are concerned about finding the right level of skills.
So the chiefs assembled at Davos are beginning to switch from the survival mode forced on them by the financial crisis, to growth mode in a more encouraging economic climate.
In 2014, their glass is half-full again.