The proportion of CEOs who believe global economic growth will improve over the next 12-months has more than doubled year-on-year. At the same time the proportion of CEOs concerned about their long-term business viability has risen to 45 per cent as tech and climate pressures accelerate, according to PwC’s 27th Annual Global CEO Survey.
The survey, which interviewed 4,702 CEOs across 105 countries and territories, found that 38 per cent of CEOs are optimistic about global economic growth prospects over the next 12-months, up from 18 per cent in 2023. CEO expectations of economic decline have also tumbled from a record high in last year’s survey (73 per cent) to 45 per cent, as perceived exposure to inflation and macroeconomic volatility fell by 16 percentage points (to 24 per cent) and 7 percentage points (to 24 per cent) respectively. Despite ongoing conflicts, the proportion of CEOs who felt their company is highly or extremely exposed to geopolitical conflict risk fell 7 percentage points (to 18 per cent).
CEOs in most regions of the world are also more likely to be optimistic about domestic economic prospects than pessimistic. However, CEOs in North America and Western Europe buck the trend – in Western Europe, 32 per cent expect their domestic economies to improve, 48 per cent decline; North America, 31 per cent and 52 per cent, respectively.
CEOs are more likely to plan to increase than decrease their headcount in the next 12-months, with 39 per cent reporting that they expect to increase their headcount by 5 per cent or more. Employers in every region are more likely to increase than decrease headcount, with the Middle East the most bullish on hiring (65 per cent).
While the trajectory is positive, confidence is fragile as megatrends including technological disruption – exemplified by generative AI – and the climate transition converge. Almost half (45 per cent) of CEOs say they do not believe their current business will be viable in a decade if it continues on its current path – up from 39 per cent in 2023. Reflecting uncertainty about how they will manage megatrends, CEOs are somewhat less confident than last year in their own company’s prospects for revenue growth over the next 12 months – down from 42 per cent to 37 per cent.
Bob Moritz, Global Chair, PwC, says: “As business leaders are becoming less concerned about macroeconomic challenges, they are becoming more focused on disruptive forces within their industries. Despite rising optimism about the global economy, they are actually less optimistic than last year about their own revenue prospects, and more acutely aware of the need for fundamental reinvention of their business. Whether it is accelerating the roll-out of generative AI or building their business to address the challenges and opportunities of the climate transition, this is a year of transformation.”
The AI opportunity
CEOs overwhelmingly see generative AI as a catalyst for reinvention that will power efficiency, innovation, and transformational change. Nearly three-quarters (70 per cent) believe it will significantly change the way their company creates, delivers, and captures value in the next three years.
CEOs are also optimistic about the short-term impact. Over the next 12 months, almost three-fifths (58 per cent) expect it to improve the quality of their products or services and almost half (48 per cent) say it will enhance their ability to build trust with stakeholders. They also expect better outcomes for their business – 41 per cent expect it to positively impact revenue and 46 per cent expect it to positively impact profitability. The technology, media and communications sector is most positive about the impact on profit (54 per cent), while energy, utilities and resources are least optimistic (36 per cent).
But while CEOs are increasingly looking to the transformative benefits of generative AI, the great majority say it will require workforce upskilling (69 per cent). They have also expressed concern about an associated rise in cybersecurity risk (64 per cent), misinformation (52 per cent), legal liabilities and reputation risks (46 per cent), and bias towards specific groups of customers or employees (34 per cent) in their companies.
CEOs report progress on climate priorities
As CEOs establish priorities, many are seeing the climate transition as an industry disruptor containing distinct opportunities in addition to risks. Nearly one-third expect climate change to shift the way they create, deliver, and capture value over the next three years – up from less than one-quarter who said as much regarding the past 5 years.
CEOs are making progress in turning their commitments into action. 76 per cent have either begun or completed steps to improve energy efficiency, while 58 per cent report having made similar strides when it comes to innovating new, climate-friendly products, services or technologies.
On the other hand, only 45 per cent note having made progress on or completed incorporating climate risk into financial planning (with 31 per cent noting no plans to do so). Action on adaptation to physical climate risks is also lagging at 47 per cent (with 29 per cent noting no plans to act).
The survey suggests significant support for decarbonisation, with only 26 per cent saying that a lack of board or management buy-in is at least a moderate barrier to decarbonisation. Instead, CEOs cite regulatory complexity (54 per cent) and lower economic returns for climate friendly investments (51 per cent) as the biggest barriers to be overcome. CEOs are beginning to take on the economic barrier, with four in ten reporting that they have accepted lower hurdle rates for climate-friendly investments than for other investments—in the majority of cases between one and four percentage points lower.
The reinvention imperative
As CEOs become more aware of the megatrends facing businesses globally, survey respondents expressed increased concern around their long-term business viability. Almost half (45 per cent) note they are concerned their businesses will not be viable beyond the next decade without reinvention – up from 39 per cent in 2023. Notably, the survey shows smaller companies are at greater risk: 56 per cent of CEOs leading businesses generating less than US$100 million in annual revenue believe their businesses will only be viable for 10 years or less if it continues running on its current path. This falls to 27 per cent for those making US$25 billion or more in revenue annually.
Almost all (97 per cent) CEOs note they have taken steps to change how they create, deliver, and capture value in the past five years, and over three-quarters (76 per cent) have taken at least one action that had a large or very large impact on their company’s business model.
But while CEOs are taking action, they are faced with a number of challenges. Two thirds (64 per cent) cite the regulatory environment as inhibiting their ability to reinvent their business model to at least a moderate extent, 55 per cent point to competing operational concerns, and 52 per cent point to a lack of skills in their company’s workforce.
A further obstacle is inefficiency. CEOs perceive significant inefficiencies across a range of their companies’ routine activities—everything from decision-making meetings to emails—viewing roughly 40 per cent of the time spent on these tasks as inefficient. A conservative PwC estimate of the cost of that inefficiency would be tantamount to a self-imposed US$10 trillion tax on productivity.
Moritz concludes: “This year’s data suggests a high degree of CEO uncertainty ahead, but CEOs are taking action. They are transforming their business models, investing in technology and their people, and managing the risks and opportunities presented by the climate transition. If businesses are to thrive over the short and long-term, build trust, and deliver sustained and long-term value, they must accelerate the pace of reinvention.”
