Pessimism takes global CEOs, and 4 in 10 fear seeing business extinct in ten years

For 39% of CEOs in the world (and 33% in Brazil), the companies they run will be economically unviable in ten years if there are no major changes, shows the 26th edition of the Global CEO Survey, a study carried out annually by the consultancy PwC.

For this year’s study, more than 4,400 top executives from a hundred countries were interviewed as of the end of last October — therefore, after the presidential elections in Brazil.

The interviewed CEOs, all from medium and large companies, are pessimistic about the macro scenario: 73% of them say they expect a slowdown in the global economy this year, an almost exact reversal of the perspectives taken in 2022, when 77% said they expected acceleration and only 17 %, a loss of rhythm.

“The CEO, who is sometimes pressured to produce results in the short term, starts to look and think ‘if I don’t make the appropriate transformations I won’t exist in a little while, I won’t be competing with the new entrants in the market’, so I need to make an investment,” he told Sheet Marco Castro, partner-president of PwC in Brazil.

“Probably the worst time to come to this conclusion is a time of inflation, of redefining chains”, completes Castro, who is taking part in the launch of the report this Monday (16th) in Davos, where the annual meeting of the World Economic Forum takes place.

In addition to the two threats cited by Castro, CEOs are also concerned about geopolitical tensions (read the War in Ukraine, and the fears it provokes in European neighbors, including an energy supply disruption) and cybersecurity issues.

The optimism seen in 2022 is attributed, at this moment, to the expectation of economic recovery after the cooling of the Covid pandemic, something that until now has not materialized fully or evenly between countries.

Despite the gloomy scenario, Brazilians are the most optimistic regarding the performance of their country’s economy: 2 out of 3 (66%) say they believe in acceleration of the national economy, followed by the Chinese (64% optimistic) and the Indians (57 %).

Japanese, Americans, Canadians and French show similar pessimism regarding the global and national economy (29% expect local acceleration in Japan; 17% in Canada, 16% in the US and 12% in France). CEOs in Germany, the UK and Italy are even more pessimistic about their country’s prospects than the world’s (in Germany only 6% expect acceleration).

This design, according to Castro, could place Brazil in a strategic position, even if the country has its own setbacks. Brazilian companies, for better or for worse, are more used to dealing with inflation, having become more resilient to this type of crisis than their foreign counterparts for which the scenario is unprecedented or nearly so.

Furthermore, he points out, the country is a kind of oasis at a time when the energy crisis is a real threat and the demand for clean sources of supply is growing.

On the other hand, the promised and necessary investments in education and health are yet to come, with inertia from both the public and private sectors in the face of the problem, he says. Above all, in the opinion of the president of PwC, the digital divide in the country is only growing, which could make the historical problem of productivity in the country even greater in the future.

In general, global risks call for focus calibration. Business managers, says Castro, should restrict their areas of activity to the original premises, which can also accelerate merger and acquisition processes (companies would seek specialized partners in non-essential activities for their production, for example). In the Brazilian case, this movement can occur in the finance and retail sectors.

PwC asked CEOs what steps they have taken in the last 12 months and what they intend to take in the next 12 months to address the crises. Last year, the most common measure was cutting operating costs (69% of respondents), diversifying the range of products and services (56%) and seeking alternative suppliers (53%).

For the year ahead, the most cited measures were reassessment of ongoing projects or important initiatives (42%), slowdown in investments (33%) and postponement of transactions (32%).

Cutting manpower is an option that 59% ruled out in the past and future range. According to the study’s data, however, CEOs “avoid reducing the number of professionals, in part, because of the increase in voluntary resignation rates recorded last year in many countries, including Brazil, in the phenomenon known as ‘Great Evasion ‘”.

Survey participants, the text states, seem to believe that high turnover rates will continue, except in the United States, where most predict a drop in turnover.

When asked which countries they considered the three most important for the respective organization’s growth prospects over the next 12 months, only 4% mentioned Brazil (same index as in 2022), leaving the country in tenth place among those cited, with the United States (40 %) and China (23%) leading the ranking.

When the question is asked of Brazilian CEOs, the leaders are the same two countries, with Mexico (14%) and Germany (13%) following, surpassing the unstable Argentina (12%).