CEOs across the globe are more confident about the economy and their company’s growth prospects, though their rising optimism is tempered by concerns about political instability and protectionism.
According to consultancy PwC’s global CEO survey, which this year garnered responses from 1,379 leaders across 79 countries, 29% expect global economic growth to increase in 2017, up from 27% last year.
The findings, released at the World Economic Forum in Davos, Switzerland, show that 38% are very confident about their company’s growth prospects, up from 35% in 2016. And 52% expect to increase their headcount, up from 48%.
“Despite a tumultuous 2016, CEO confidence is moving back up—albeit slowly and still a long way from the levels we saw back in 2007,” PwC global chairman Bob Moritz said.
In the U.S., CEOs were a little more upbeat, with 39% very confident of their company’s prospects. Their optimism partly owes to the election of Donald Trump, who has promised lower taxes, looser regulation and increased investment in infrastructure.
In Chief Executive’s January 2017 CEO Confidence Index survey, CEOs continued to increase their optimism as well, rating their confidence in business 12 months from now a 7.07 on a scale of 1 to 10, with 1 being the lowest and 10 being the highest. This is the third consecutive month of increases since the election.
Also on Monday, the International Monetary Fund raised its U.S. economic growth forecast for 2017 to 2.3% from 2.2% and for 2018 to 2.5% from 2.1%. However, the IMF said there is “a wide dispersion of possible outcomes around the projections, given uncertainty surrounding the policy stance of the incoming U.S. administration”.
Indeed, CEOs questioned by PwC cited “economic uncertainty” as their top concern, followed by over-regulation and availability of key skills. Concerns about protectionism grew, with 59% of CEOs worried about the issue worldwide, rising to 64% for CEOs in the U.S. and Mexico.
The rise of populist leaders in the U.S. and Europe has been driven by public skepticism over the apparent benefits of globalization, which has also damaged trust in business. “The real challenge here though, isn’t just one of how CEOs navigate, it’s about the need for CEOs to have a deeper, two-way relationship with stakeholders, customers, employees and the public,” Moritz said.