Stronger world economy predicted for 2022: PwC Annual Global CEO Survey

Most CEOs around the world expect things to improve, despite potential threats.
The ability to attract and retain talent emerged as major underlying concern among chief executives. Image: AdobeStock

CEO optimism around global economic factors is at its highest in a decade, with 77% of 4 446 CEOs surveyed predicting improving conditions while only 15% expect the economy to worsen.

This is according to PwC’s 25th Annual Global CEO Survey which polled CEOs in 89 countries and territories between October and November 2021.

Despite undesirable market conditions such as rising inflation, disruptions in the supply chain and relentless Covid-19 whirlwinds, the report reveals that CEO optimism for 2022 is in fact a tick higher than the 76% optimism level from a year ago and fully 54 points higher than 2020 when more than half of CEOs predicted a declining economy.

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“While the ongoing pandemic and emergence of new variants cast a shadow over the year, the high level of CEO optimism we found speaks to the strength and resilience of the global economy and the ability of CEOs to manage through uncertainty,” says PwC global chair Bob Moritz.

“There is nothing ‘normal’ about the world we are working in, but we are getting used to it,” he adds.

“We are seeing differences in confidence among countries, and there is no shortage of challenges to navigate, but it is encouraging that CEOs we spoke with on the whole feel positive about 2022.”

Views vary geographically

While there is general optimism among CEOs for economic growth in 2022, this view varies across individual countries and territories.

Among the South African CEOs surveyed, 37% say they are ‘very confident’ about their organisations’ prospects for revenue growth over the next 12 months, while in Africa, 85% of CEOs expect that global economic growth will improve and 8% expect it to drop.

“The Covid-19 pandemic has pushed many organisations in Africa to rethink the way they operate and how they build trust and deliver sustained outcomes,” says Dion Shango, territory senior partner at PwC Africa.

“Optimism about growth prospects in Africa indicates greater resilience; Africa’s CEOs are leading their organisations more effectively, managing more complex scenarios, engaging with a broader set of stakeholders and acting with courage during uncertainty. They’re optimistic – and realistic – about the challenges and opportunities ahead.”

Most versus least optimistic

Among the largest territories, optimism is highest in India with 94% of CEOs anticipating global growth in the coming year.

The same perspective is seen in countries such as Japan (plus 16 points to 83%, from 67% last year), United Kingdom (up five points to 82%), Italy (reached 89%, up 18 points from a year ago), and France (soaring 25 points to 85%).

The US however does not share this optimism – its levels dropped 18 points to 70%.

The trend is the same for Brazil (down seven points to 77%), China (down nine points to 62%), and Germany (down four points to 76%). According to PwC, the trend may be attributed to the inflation and supply chain constraints that have become more of an issue.

While US CEOs may be less hopeful about the global economy, they are comparatively confident about their own companies’ growth prospects, with 40% stating that they are extremely confident about achieving revenue growth in 2022. CEOs in India are also similarly confident.

Threats

According to the report, cyber and health risks rank as the leading global potential threats that could impact on companies’ overall performance – 59% of CEOs in financial services cite cyber attacks as a key threat, while manufacturing (40%) and consumer (39%) CEOs displayed lower concern levels despite those sectors’ high attack volumes.

In the hospitality and leisure sector 75% of CEOs say they are concerned about the impact of health risks on their businesses. In Africa, health risks and macroeconomic volatility rank as the leading threats, followed by cyber risks.

According to Shango, CEOs in Africa are understandably concerned about health risks outside Covid-19, including diseases such as malaria, tuberculosis, HIV/Aids and others that have remained challenging for many years.

In addition, 43% of CEOs (South Africa: 37%) are either very or extremely concerned about the potential impact of inflation, fluctuations in GDP and labour market issues in the coming year.

Another major underlying concern is the ability to attract and retain talent – 69% of CEOs concerned about social inequality risks cite this as an impact, as do 62% of CEOs concerned about health risks.

“When CEOs look at the next 12 months, they are understandably concerned about potential threats to short-term performance that could result from disruptions, including macroeconomic volatility, cyber and health risks,” adds Moritz.

“While threats such as climate change and social inequality are further down the list, it is critical not to lose focus on these more long-term issues as they will define what sort of world we live in and hand down to the next generation.”

Listen to this MoneywebNOW podcast with Simon Brown:

Palesa Mofokeng is a Moneyweb intern.

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