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A big majority of CEOs (73%) worldwide believe global economic growth will decline in the next 12-months, the most pessimistic outlook in over a decade, according to PwC Global CEO Survey.
Nearly 40% of CEOs think their organisations will not be economically viable in a decade. The pattern is consistent across a range of sectors, including telecommunications (46%), manufacturing (43%), healthcare (42%) and technology (41%), the survey noted.
CEOs are also seeing multiple direct challenges to profitability within their own industries over the next 10-years. More than half (56%) believe changing customer demand/preferences will impact profitability, followed by changes in regulation (53%), labour/skills shortages (52%), and technology disruptions (49%).
CEOs' concerns
Inflation, macroeconomic volatility and geopolitical conflict top CEOs' concerns.
Twenty five percent of CEOs also feel financially exposed to geopolitical conflict risks, whereas cyber risks (20%) and climate change (14%), which were top concerns a year ago, have fallen in relative terms.
The war in Ukraine and growing concern about geopolitical flashpoints in other parts of the world have caused CEOs to rethink aspects of their business models.
According to the PwC survey, almost half of respondents that are exposed to geopolitical conflict integrating a wider range of disruptions into scenario planning and corporate operating models either by increasing investments in cybersecurity or data privacy (48%), adjusting supply chains (46%), re-evaluating market presence or expanding into new markets (46%), or diversifying their product/service offering (41%).
CEOs are cutting costs but not headcount
CEOs worldwide are looking to cut costs and spur revenue growth.
Fifty two percent of CEOs report reducing operating costs, while 51% report raising prices and 48% diversifying product and service offerings.
Bob Moritz, Global Chairman, PwC, said: "A volatile economy, decades-high inflation, and geopolitical conflict have contributed to a level of CEO pessimism not seen in over a decade. CEOs globally are consequently re-evaluating their operating models and cutting costs, yet despite these pressures, they are continuing to put their people front and centre as they look to retain talent in the wake of the 'Great Resignation.'
However, more than half (60%) say they do not plan to reduce the size of their workforce in the next 12 months.
A vast majority (80%) indicate they do not plan to reduce staff remuneration in order to retain talent and mitigate workforce attrition rates.
"The world continues to change at a relentless pace, and the risks facing organisations, people and the planet will only continue to rise. If organisations are not only to thrive but survive the next few years they must carefully balance the dual imperative of mitigating short-term risks and operational demands with long-term outcomes as businesses that don't transform, won't be viable," Moritz added.
(Writing by Seban Scaria; editing by Daniel Luiz)
