Chief executive officers have turned pessimistic on global economic growth, according to a new survey by PricewaterhouseCoopers LLC.
Released on the eve of the World Economic Forum’s annual meeting in Davos, Switzerland, the poll of 1,409 CEOs from 83 nations found 27 percent expect the economic outlook to improve this year, a fall from 37 percent last year. Twenty-three percent said it will worsen, up from 17 percent in 2015.
The survey underscores the gloom surrounding the Davos forum amid a Chinese economic slowdown, sliding commodity prices and a surge in geopolitical concerns from the Middle East to the Korean peninsula. The conference swings into action on Wednesday, with Goldman Sachs Group Inc. CEO Lloyd Blankfein and Mary Barra of General Motors Co. among the 2,500 delegates.
“There’s no question that business leaders’ confidence in both the global economy and their own company growth prospects has taken a knock,” Dennis Nally, PwC’s global chairman, said in the report.
Chinese economic growth slowed to 6.9 percent last year, the weakest since at least 1990. The nation’s shift away from exports and manufacturing, a slowdown in emerging markets and the Federal Reserve’s gradual exit from ultra-low interest rates has prompted the International Monetary Fund to cut its outlook for world growth. The Washington-based lender said on Tuesday it predicts the global economy will expand 3.4 percent this year and 3.6 percent in 2017.
Two thirds said sentiment in their own revenue growth had declined, with only 35 percent saying they were very confident, compared to 39 percent last year. Just 24 percent of Chinese bosses were that upbeat, down from 36 percent in 2015, while 33 percent of U.S. executives said the same, a decline from 46 percent. The most downbeat were the Swiss with only 16 percent very confident about revenue performance, compared to 24 percent last year.
Two-thirds of respondents said they see more threats facing their companies than three years ago. Seventy nine percent identified over-regulation as the biggest risk to their growth prospects, followed by geopolitical uncertainty at 74 percent and currency volatilityat 73 percent.
For all the despondency, 48 percent of CEOs said they still planned to increase their headcount over the next 12 months, compared to 50 percent a year ago. Employers are most active in India, the U.K. and China.