PwC's 21st CEO Survey - The Anxious Optimist in the Corner Office

32 Pages·2017·4.43 MB·English

21st CEO Survey
The Anxious Optimist
in the Corner Office
ceosurvey.pwc
2 | PwC’s 21st CEO Survey
Contents
3 13 18 26
Global vs. Organisational Growth: Threats: What Keeps CEOs Up at Global vs. Local Prosperity: A Message from PwC Global
Carpe Diem Night Differs By Region Navigating a Fractured World Chairman Bob Moritz
29 21st CEO Survey Methodology
30 Endnotes
31 PwC Network Contacts
3 | PwC’s 21st CEO Survey
Global vs. Organisational Growth:
Carpe Diem
Despite highly publicised handwringing over
geopolitical uncertainty, corporate misbehaviour,
and the job-killing potential of artificial intelligence,
PwC’s 21st CEO Survey reveals surprising faith and
optimism among chief executives in the economic
and business environment worldwide, at least over
the next 12 months.
4 | PwC’s 21st CEO Survey
Why are CEOs around the world so
Exhibit 1
optimistic? And why doesn’t their global
A majority of CEOs believe global economic growth will ‘improve’
good cheer translate into equivalent
exuberance regarding their own over the next 12 months
organisation’s growth prospects?
Q Do you believe global economic growth will improve, stay the same, or decline over the next 12 months?
This year saw the highest-ever jump to the
highest-ever level of CEO optimism regarding
57% Improve
global growth prospects over the next 12
53%
52%
months (see Exhibit 1). For the first time
49% 49%
48%
since we began asking the question in 2012,
44%
44%
the majority of CEOs surveyed believe global
economic growth will ‘improve’. In fact, the 37% 36% Stay the same
34%
percentage of CEOs predicting ‘improved’
29%
27%
growth doubled from last year. This record 28%
level of optimism holds fast across every
23%
region from North America (defined as the
18%
17% 17%
US and Canada for this survey) and Latin 15%
America to Western Europe, Central &
7%
Eastern Europe (CEE), Africa, the Middle 5% Decline
East, and Asia-Pacific (see Exhibit 2).
2012 2013 2014 2015 2016 2017 2018
Source: PwC, 21st Annual Global CEO Survey
Base: All respondents (2018=1,293; 2017=1,379; 2016=1,409; 2015=1,322; 2014=1,344; 2013=1,330; 2012=1,258). Please note: From 2012-2014 respondents were asked ‘Do you believe the global economy will improve, stay the same, or decline over the next 12 months?’
5 | PwC’s 21st CEO Survey
Exhibit 2
All regions report record levels of optimism regarding 2018
Q Do you believe global economic growth will improve, stay the same, or decline over the next 12 months?
i
Chart shows percentage of respondents answering ‘improve’.
+97% +95% +139% +113% +87% +100% +63% +38%
Increase from
2017 to 2018
%
5 %
6 3 %
% 6 0 %
57 9% 6 58 %
% 2 % % 50% 49% % 52 %
44 37% 41% % % 41% 37% 45 45 % % 44 % 45 40% 39% 41%
15% 18% 27% 29% 3% 15% 34 21% 33 18% 18% 16% 26% 19% 20% 27% 28% 17% 34 33 31% 22% 34 26% 3% 26% 16% 25% 28% % 26% 28% 30%
1 1
0
% % 1
8 7
A
N
Global Latin America North America Asia-Pacific Western Europe Middle East CEE Africa
2 3 4 5 6 7 8 2 3 4 5 6 7 8 2 3 4 5 6 7 8 2 3 4 5 6 7 8 2 3 4 5 6 7 8 2 3 4 5 6 7 8 2 3 4 5 6 7 8 2 3 4 5 6 7 8
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
Source: PwC, 21st Annual Global CEO Survey. Base: All respondents (2018=1,293; 2017=1,379; 2016=1,409; 2015=1,322; 2014=1,344; 2013=1,330; 2012=1,258)
Please note: From 2012-2014 respondents were asked ‘Do you believe the global economy will improve, stay the same, or decline over the next 12 months?’
6 | PwC’s 21st CEO Survey
Exhibit 3
CEOs are more cautiously confident in
their own growth prospects in 2018,
We have only to look past frantic geopolitical a steady recovery that looks set to continue except in North America
headlines to current economic indicators to in 2018. Even the UK economy, while slowing
understand the reason why. When all the this past year, has not yet been severely Q How confident are you about your organisation’s prospects for revenue growth over the next 12 months?
data is in, 2017 will almost certainly turn out impacted by Brexit.2
i
Chart shows percentage of respondents answering ‘very confident’.
to be the best year the global economy has
As for the United States, the domestic
seen since 2010.1 This rising tide is not just
economy is chugging along at 3% growth.3 54
an overall macroeconomic phenomenon; it is 53% North America
The Trump administration’s pro-business 52
balanced across regions. Most of the world’s
major economies are experiencing positive agenda of deep corporate tax cuts and rolled- 50
back regulation has helped accelerate one of
growth in contrast to the situation just a few 48
the longest stock market booms in history,
years ago. In 2015, Russia and Brazil were 46
while driving corporate confidence to new Latin America (45%)
in recessions brought on by plummeting
44 Asia-Pacific (44%)
highs and jobless rates to new lows.4
commodity prices and political unrest. The
42 Global (42%)
southern countries in the Eurozone – most
It’s no wonder that North America is so 40 CEE (40%)
notably Greece – were on the brink of default,
positive, with nearly two-thirds of CEOs
38 Western Europe (38%)
or in default, on their debt and threatening
reporting that they believe global economic
to bring down the euro. And China’s surging 36
growth will improve, and a majority
growth had taken a hit from the Shanghai 34
indicating that they are ‘very confident’ about Middle East (33%)
market crash. 32
their own organisation’s revenue growth in
2018 (see Exhibits 2 and 3). 30
Now, global commodity prices seem to have
28
stabilised at a moderate level. Russia and
Brazil have returned to modest growth; China 26 Africa (26%)
is doing well, and the Eurozone has mounted
2017 2018
Source: PwC, 21st Annual Global CEO Survey
Base: All respondents (2018=1,293; 2017=1,379)
7 | PwC’s 21st CEO Survey Now that President Trump can claim victory on tax reform, we expect that the US economy will continue
to grow, in the short term at least. However, the next billion consumers are not going to come from
North America or Western Europe, but from the rest of the world. Furthermore, the real competition for
Western-based multinationals is increasingly coming from local “piranha” companies in these markets as
they develop ever stronger and more sophisticated marketing and technology skills (especially in China).
Sir Martin Sorrell, CEO, WPP
For some, this burst of optimism is itself a little breathing space before difficult times a majority of CEOs demonstrate the highest as compared with the next highest region,
reason for continued optimism and is return. For a lasting recovery, we need a possible level of confidence in their company’s Western Europe at 45%, and a global
grounded in a sound rationale. As part of this more comprehensive, broader-based, more revenue growth prospects over the next 12 average of 42%.
year’s survey, we asked leading economists deliberate change of context.” months.
When we look at the geographic markets
and business thought leaders to comment
Indeed, beyond North American shores, This divide is quite striking. While the rest CEOs are turning to for growth, again, North
on the survey findings. Glenn Hubbard,
CEOs’ optimism is more tempered, specifically of the world is cautiously optimistic, North America, specifically the United States, tops
economist and dean of Columbia Business
regarding their own organisation’s revenue American CEOs have never been more sure of the chart; 46% of global CEOs consider it
School, observes: “We are in a cyclical
growth prospects beyond 2018. With their companies’ near-term prospects. Just last one of the three most important countries
recovery that has been going on for many
respect to the next 12 months, CEOs remain year, only 39% reported that they were ‘very for growth, followed by China at 33%
years since the financial crisis. People have
confident; in fact, the percentage of ‘very confident’; that figure jumps to 53% this year (see ‘US Widens the Gap with China’).
gotten more optimistic. I think in most parts
confident’ responses overall climbs. But (see Exhibit 3). The last time North American Germany strengthens its hold on third
of the world, CEOs believe that changes
the record jump in positivity with regard to CEOs were this exuberant was in 2007, the place, with one in five CEOs considering
in policy are going to continue to improve
global economic growth does not translate year before the global financial crisis. it an important growth market. With the
growth.”
into an equivalent leap in confidence in their full impact of the Brexit vote still an open
When asked what will drive that growth,
Others are not so sanguine and see signs own organisation’s 12-month prospects. question, the UK is in a holding pattern at
virtually all North American CEOs point to
of irrational exuberance. Noted economic Regionally, it’s a mixed bag (see Exhibit 3), #4. And India bumps Japan as the fifth most
organic growth (94%), followed by new M&A
historian Carlota Perez asks, “Is this a real with North America, Latin America, Central attractive market in 2018. Russia regains its
(61%) and cost reduction (59%). Of note is
recovery or just a short-term blip? Historically, & Eastern Europe, and Asia-Pacific reporting place in the top 10, and Canada basically
North American CEOs’ reliance on mergers
when there is a real transition into prosperity, higher levels of ‘very confident’, and the rest switches places with Mexico (see Exhibit 4).
and acquisitions as compared with the rest of
everybody feels it. I hope leaders don’t of the world moving in the opposite direction.
the world – 61% cited it as a growth driver,
believe this recovery is permanent. It is just Still, North America is the only region where
8 | PwC’s 21st CEO Survey
2017 2018
Exhibit 4 1 43% US US 46%
The US remains
2 33% China China 33%
the top spot for
3 17% Germany Germany 20%
global investment,
4 15% UK UK 15%
while India moves
5 8% Japan India 9%
into the top 5
6 7% India Japan 8%
Q Which three countries, excluding the country
7 7% Brazil France 7%
in which you are based, do you consider most
important for your organisation’s overall growth
8 6% Mexico Brazil 7%
prospects over the next 12 months?
9 5% France Canada 6%
10 5% Australia Russia 5%
11 4% Russia Australia 5%
12 4% Saudi Arabia Hong Kong 5%
13 4% Indonesia Mexico 4%
14 4% Hong Kong Korea 4%
Source: PwC, 21st Annual Global CEO Survey. 15 4% Canada UAE 4%
Base: All respondents (2018=1,293; 2017=1,379)
9 | PwC’s 21st CEO Survey
Exhibit 5
The US pulls further away from China as the top market for
growth prospects
The US widens the gap with China
Q Which three countries, excluding the country in which you are based, do you consider most important for your organisation’s overall growth prospects over
China and the US have vied for the top spot in the next 12 months?
terms of attractiveness to global investment
for years, but China held firmly to the lead 46% US
until 2015, when its stratospheric growth
significantly decelerated. Since then, the
43%
United States has gained ascendancy and
steadily pulled further away (see Exhibit 5).
(It’s worth noting that the survey parameters 4162%%
39%
do not permit a CEO to vote for the country 38%
in which his or her company is based,
so US CEOs did not participate in this vote
of confidence.) 34% 34%
33% 33% 33% China
31%
30%
23%
2013 2014 2015 2016 2017 2018
Source: PwC, 21st Annual Global CEO Survey
Base: All respondents (2018=1,293; 2017=1,379; 2016=1,409; 2015=1,322; 2014=1,344; 2013=1,330)
10 | PwC’s 21st CEO Survey
“Three factors make the United States But don’t count China out. Although it no
favourable to business now,” notes CEO longer rides a 10% growth juggernaut,
advisor and author Ram Charan. “First, no China remains a global growth engine with
country has better mechanisms for funding steady growth of 6.5 to 7% and a stable
risks or for raising capital. Second, robotic government.5 Where China lags the United
technology is advancing rapidly, and thus States is in the ease of doing business –
labour cost arbitrage – less expensive labour the World Bank ranks China 78th (of 190
in other countries – is no longer a restricting economies) on this overall measure, while
factor. Third is growth. At 3%, it is a huge the US ranks sixth (although Hong Kong
factor. And despite a labour shortage, high- is even more inviting, at number five). The
level skills in the US are still the best in the Chinese government recognises that foreign
world. Foreigners who want to succeed in the direct investment has slowed, and it has
US market want to build plants there. The implemented important reforms to open its
corporate tax cut will likely accelerate foreign market, particularly in the financial services
direct investment in America, especially from sector.6
Europe and Japan.”
Confirming Charan’s second point is the
fact that Industrial Manufacturing CEOs
overwhelmingly pick the US as their top
destination for investment next year (43%)
versus China (27%).