In spite of geopolitical uncertainties, corporate misbehavior and the fear of artificial intelligence killing jobs, company leaders around the world are optimistic, and most of them believe global growth will improve over the next 12 months, a new report by consultants PwC shows.
“For the first time since we began asking the question in 2012, the majority of CEOs surveyed believe global economic growth will ‘improve,’” PwC’s 21st CEO Survey said. This record level of optimism was seen in every region: from North America — the US and Canada — Latin America, Western Europe, Central & Eastern Europe (CEE), Africa, the Middle East and Asia Pacific.
The optimism, the report said, stems mainly from the fact that 2017 will “almost certainly turn out to be the best year the global economy has seen since 2010,” with most of the world’s major economies experiencing positive growth, in contrast to the situation just a few years ago. Russia and Brazil have returned to modest economic growth — China is doing well and the recovery in the Eurozone looks set to continue also this year. Even the UK economy, while slowing in the past year, is not showing signs of having been as yet severely impacted by Brexit, the authors of the report said.
In addition, Trump’s pro-business agenda of corporate tax cuts and curbed regulation has provided a boon to the US stock market and “has helped accelerate one of the longest stock market booms in history, while driving corporate confidence to new highs and jobless rates to new lows,” the report said.
The CEOs interviewed said that the US will remain, even in 2018, the top spot for global investment, with China maintaining its second position, and Germany keeping its third place. India jumps in 2018 to fifth place from sixth, last year, switching places with Japan. The UK remains the fourth best spot for investment also in 2018, the survey showed.
Over-regulation was the top concern of CEOs globally, unchanged from last year. The concern about terrorism jumped from 12th place last year to the second place this year, and geopolitical uncertainty was the third largest concern globally in 2018, compared to fifth last year. The fear of cyber threats jumped to fourth place this year, compared to 10th place last year.
“Each region reports a different mix of threats as the most concerning,” the report said. “But one general global observation is that CEOs across the world are increasingly anxious about broader societal threats — such as geopolitical uncertainty, terrorism, and climate change — rather than direct business risks such as changing consumer behavior or new market entrants. The threats that trouble CEOs are increasingly existential.”
The CEOs also reported anxiety about the impending “promise and perils” of Artificial Intelligence. “AI is no longer the stuff of science fiction movies; it is here, and it is real. We at PwC project that AI will contribute an additional US$15.7 trillion to global GDP by 2030, an increase of 14%. That boon to the overall economy, however, will come at great cost to those who cannot rise to its challenges in time.”
In the Middle East, geopolitical uncertainty, cyber threats and over-regulation led the list of concerns, followed by terrorism and the speed of technological change. In North America, cyber threats and over-regulation were the two top concerns, followed by geopolitical uncertainty, terrorism and speed of technological change. Whereas in Western Europe, populism was the major concern, followed by over-regulation, geopolitical uncertainty and cyber threats.
When asked if globalization has helped “close the gap between the rich and the poor,” nearly 40% of CEOs respond “not at all,” the report said. And 30% gave the same dark assessment of how effective globalization is with regard to “averting climate change and resource scarcity”.
For the survey, PwC conducted 1,293 interviews with CEOs in 85 countries.