Why CEO Pessimism Over the Economy Just Reached a Record High

The start of a year often promises clean slates and new beginnings — but for CEOs across the world, lingering uncertainties over trade tensions and geopolitical challenges have painted a darker picture for 2020.

A recently published PricewaterhouseCoopers study found that, for the first time, more than half of the world’s CEOs predicted a slower economy in the year ahead. According to the report, 53% of executive chiefs believe the rate of global GDP growth will decline — up from 29% in 2019 and just 5% in 2018.

In contrast, the number of leaders that anticipated an increase in the rate of economic growth plunged from 42% last year to just 22% in 2020. It marked the highest level of pessimism since the firm began tracking such data in 2012. The survey included responses from nearly 1,600 CEOs from 83 countries across the world and launched at the World Economic Forum annual meeting in Davos, Switzerland.

“The drop in confidence in economic growth is not surprising — even if the scale of the change in mood is,” said Bob Moritz, chairman of the PwC Network. “These challenges facing the global economy are not new; however, the scale of them and the speed at which some of them are escalating is new.”

The observation was particularly significant in North America, Western Europe and the Middle East: A respective 63%, 59% and 57% of business leaders from those regions expected lower global growth this year. CEOs also shared that they had lower confidence in their own outlooks for their organizations, with only 27% indicating that they’re “very confident” in their prospects for revenue gains in 2020.

In another study released early this month, The Conference Board found that a possible recession ranks as the top external concern for the second year in a row of global business chiefs and other C-suite executives. Such fears jumped to the top of American CEOs’ list of worries, the think tank reported, surpassing cybersecurity, which was their biggest concern in 2019 but fell to sixth for 2020. Heightened competition took second place, while global trade tied global political instability for the third spot, as President Donald Trump continued to fight much-criticized tariff battles against foreign rivals such as China. In parallel, concerns over Brexit and unrest in Hong Kong rattled markets.

Despite the pessimism, PwC still foresees opportunities for CEOs who confront uncertainty versus taking defensive actions such as reducing investments, pulling back from technology and shying away from challenges.

“With an agile strategy, a sharp focus on the changing expectations of stakeholders and the experience many have built up over the last 10 years in a challenging environment, business leaders can weather an economic downturn and continue to thrive,” Moritz added.

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