The Price Waterhouse survey is the most awaited at the World Economic Forum which after the pandemic was also held this January in Davos. The surprise in the Swiss Alpine village is eCorporate pessimism: Globally, 3 out of 4 CEOs believe the economy will grow less this year.
This perception is far from the one that prevailed last year at the end of the pandemic, when it was thought that the world would take its revenge. And it’s the largest in the last decade. Among the Argentine CEOs, the concern about inflation and corporate profitability.
According to executives, the top three threats looming around the world are inflation (40%), macroeconomic volatility (31%) and geopolitical conflicts (25%). Cyber (20%) and health (14%) risks decreased compared to the previous year.
Here are the main conclusions:
- Only 30% of Argentine respondents expressed optimism for the next 12 months (10 points less than last year), while 42% expressed positive expectations for the next three years (16 points less than 2022).
- Seven out of 10 Argentine businessmen believe their organization will have high or extreme exposure to inflation for the next few months and 56% indicated that this risk will continue for the next 5 years.
- Nearly 40% of CEOs globally believe their organization it will not be economically viable within 10 years unless it transforms. In Argentina the 35% share this concern and commitment to investing in technology and staff training to reverse the trend.
The so-called PwC Annual Global CEO Survey gathered the opinion of more than 4,400 CEOs from 105 countries between October and November 2022, In this survey, 73% of respondents say that global economic growth will decline over the next twelve months. A central fact is that this view of the world’s top leaders it is the most pessimistic record that has been expressed in terms of global economic growth as this question was first asked twelve years ago and represents a significant decline in optimistic views of 2021 and 2022, when 76% and 77% respectively thought the economy would grow significantly.
Bob Moritz, President of PwC Global, comments: “A volatile economy, high inflation for decades and geopolitical conflicts, they helped generate a level of pessimism in CEOs not seen in more than a decade. As a result, around the world they are reevaluating their operating models and cutting costs.”
Only 18% of respondents could support better expectations, while 73% assure that the global economy it will get worse in the context of the war between Russia and Ukraine and its side effects.
In Argentina, the percentage of respondents who support the the negative perception of the international economy is 51%opinion that intensifies when the survey investigates the short-term evolution of the national economy: 63% believe it will get worse. This is the highest number in the region, standing out against the less pessimistic Brazil (27%) and Uruguay (21%).
The most optimistic answers down 10 points from last year, settling at 30%. This same level of trust was found in just 14% of respondents when they asked about the next three years, 16 points less than last year.
More than half of local executives believe that the macroeconomic environment it will get worse in 2023, in line with the global trend. And what is alarming, the third part he doesn’t believe his company will be viable in 10 years, which will force him to rethink his business models.
Santiago Mignone, responsible partner of PwC Argentina, explained: “The great challenge that Argentine CEOs will have to face in this phase will be that of finding a balance in actions that allows, on the one hand, to solve the immediate needs of companies in the extremely challenging local situation, At the same time, we need to strategically plan the business to include key global trends that affect us. It’s not about one aspect or the other, the challenges are both urgent and structural and harmonizing them in intelligent decisions requires the best of each”.
With the economy top of mind, CEOs are looking for the balance between the immediate survival of organizations and the reinvention of business for the medium and long term.
Based on the risks described, organizations are evaluating a series of short-term actions. In line with their global and regional peers, the majority of Argentine businesspeople are already implementing or considering implementing a reduction of operating costs (93%), increase in the prices of products and services (84%), diversification of products and services (72%) and search for alternative suppliers (70%). Most do not plan to stop hiring (63%), or reduce the workforce (75%), or cut pay (86%).
The bulk of the investments planned for 2023 will be technology oriented And, in line with their peers in the region and globally, 77% of Argentine businesspeople anticipated automating processes and systems and 74% anticipated implementing advanced innovation processes, such as artificial intelligence or cloud systems.
Source: Clarin
