Fifty-seven percent of business leaders say they believe global economic growth will improve in the next 12 months, almost twice the level of last year (29%) and the largest-ever increase since PwC began asking about global growth in 2012. This trend was seen even among less optimistic countries such as Japan (2018: 38% vs. 2017: 11%).
“In Singapore, we are also seeing more positive business sentiment. However, with the increasingly complex business landscape, Singapore business leaders will need to find a way to leverage the upturn in the global economy and expand internationally,” says Yeoh Oon Jin, Executive Chairman, PwC Singapore.
This optimism in the economy is feeding into CEOs’ confidence about their own companies’ outlook, even if the uptick is not so large. Forty-two percent of CEOs said they are “very confident” in their own organisation’s growth prospects over the next 12 months, up from 38% last year.
Looking at the results by country, it’s a mixed bag. CEOs’ outlook improved in several key markets including in Australia (up 4% to 46%) and China (up 4% to 40%), where the share of CEOs saying they are “very confident” in their own organisation’s 12-month growth prospects rose.
The top three most confident sectors for their own 12-month prospects this year are technology (48% “very confident”), business services (46%) and pharmaceutical and life sciences (46%) – all exceeding the global “very confident” level of 42%.
Strategies for growth remain largely unchanged on last year’s survey – CEOs will rely on organic growth (79%), cost reduction (62%), strategic alliances (49%) and mergers and acquisitions (42%). There was a small increase in interest in partnering with entrepreneurs and startups (33% vs 28% last year).
This year, the US reinforces its lead on China as the top market for growth (46% US vs 33% China, with the US lead over China up 2% compared with 2017). Germany (20%) remains in third place, followed by the UK (15%) in fourth place, while India bumps Japan as the fifth most attractive market in 2018.
“Even with high levels of global growth confidence, business leaders want and need safe harbours for investment to secure short-term growth,” comments Bob Moritz, Global Chairman, PwC. “Access to consumers, skills, finance and a supportive regulatory environment are reinforcing leading markets’ positions, for business leaders to achieve their short-term growth targets.”
Confidence in short-term revenue growth is feeding into jobs growth, with 54% of CEOs planning to increase their headcount in 2018 (2017: 52%). Only 18% of CEOs expect to reduce their headcount.
Healthcare (71%), technology (70%), business services (67%) communications (60%) and hospitality and leisure (59%) are amongst the sectors with the highest demand for new recruits.
On digital skills specifically, over a quarter (28%) of CEOs are extremely concerned about their availability within the country they are based, rising to 51% in China. Key skills availability is also the top concern for CEOs in China (2018: 64% extremely concerned vs. 2017: 52%). Overall, 22% of CEOs are extremely concerned about the availability of key digital skills in the workforce, 27% in their industry and 23% at the leadership level.
Investments in modern working environments, learning and development programmes and partnering with other providers are the top strategies to help them attract and develop the digital talent they need.
While recent research by PwC showed that workers were optimistic about technology improving their job prospects, CEOs admit that helping employees retrain, and increasing transparency on how automation and artificial intelligence (AI) could impact jobs is becoming a more important issue for them.
Two thirds of CEOs believe they have a responsibility to retrain employees whose roles are replaced by technology, chiefly amongst the engineering and construction (73%), technology (71%) and communications (77%) sectors. Sixty-one percent of CEOs build trust with their workforce by creating transparency, at least to some extent, on how automation and AI impact their employees.
Yeoh said, “Singapore’s workforce of today must recognise that disruption is not just a buzzword and that the way we operate and do business will change drastically. More companies are implementing technologies and adopting systems that pose a real threat to jobs.
“As the Singapore government pushes the workforce to upskill, individuals must also take responsibility for their own continuous learning to stay relevant in this technology-enabled job market.”
While 18% of CEOs expect to reduce their headcount, CEOs estimate that four out of five (80%) of those jobs affected will have been impacted in some way by technology – 52% to some extent and 28% to a large extent.
The digital and automation transition is particularly acute in the financial services sector. Almost a quarter (24%) of banking and capital markets (BCM) and insurance CEOs plan workforce reductions, with 28% of BCM jobs likely to be lost to a large extent due to technology and automation.
Despite the optimism in the global economy, anxiety is rising on a much broader range of business, social and economic threats. CEOs are ‘extremely concerned’ about geopolitical uncertainty (40%), cyber threats (40%), terrorism (41%), availability of key skills (38%) and populism (35%). These threats outpace familiar concerns about business growth prospects such as exchange rate volatility (29%) and changing consumer behaviour (26%).
Underlining the shift, extreme concern about terrorism doubled (2018: 41% vs 2017: 20%) and terrorism enters the top 10 threats to growth. The threat of over-regulation remains the top concern for CEOs (42% extremely concerned), and over a third (36%) remain concerned about an increasing tax burden.
The digital and automation transition is particularly acute in the financial services sector. Almost a quarter (24%) of banking and capital markets (BCM) and insurance CEOs plan workforce reductions, with 28% of BCM jobs likely to be lost to a large extent due to technology and automation.
Despite the optimism in the global economy, anxiety is rising on a much broader range of business, social and economic threats. CEOs are ‘extremely concerned’ about geopolitical uncertainty (40%), cyber threats (40%), terrorism (41%), availability of key skills (38%) and populism (35%). These threats outpace familiar concerns about business growth prospects such as exchange rate volatility (29%) and changing consumer behaviour (26%).
Underlining the shift, extreme concern about terrorism doubled (2018: 41% vs 2017: 20%) and terrorism enters the top 10 threats to growth. The threat of over-regulation remains the top concern for CEOs (42% extremely concerned), and over a third (36%) remain concerned about an increasing tax burden.
A year after the Paris Agreement was signed by over 190 nations, which saw countries commit to voluntary action on climate change and low carbon investment, CEOs’ concern about the threat of climate change and environmental damage to growth prospects has now doubled to 31% of CEOs (2017: 15%).
High-profile extreme weather events and the US withdrawal from the Paris Agreement have significantly raised the profile of business action on climate risk, regulation and resilience. In China, over half (54%) of business leaders are extremely concerned about climate change and environmental damage as a threat to business growth, equal with their levels of concern about geopolitical uncertainty and protectionism.
Climate change and environmental damage is reported in the top five threats for businesses in Asia Pacific, and recognised as a top-five threat for the growth prospects of companies in the energy and utilities, engineering and construction, transport and logistics sectors.
High-profile extreme weather events and the US withdrawal from the Paris Agreement have significantly raised the profile of business action on climate risk, regulation and resilience. In China, over half (54%) of business leaders are extremely concerned about climate change and environmental damage as a threat to business growth, equal with their levels of concern about geopolitical uncertainty and protectionism.
Climate change and environmental damage is reported in the top five threats for businesses in Asia Pacific, and recognised as a top-five threat for the growth prospects of companies in the energy and utilities, engineering and construction, transport and logistics sectors.
“The higher level of concern is being driven by larger societal and geopolitical shifts rather than the dynamics of business leaders’ own markets,” comments Moritz. “It’s clear their mid- to long-term confidence in revenue growth is tempered by threats the business world is not used to tackling directly itself.”
 |
| Source: PwC microsite. Terrorism and cyber threats are ranked higher in the list of top 10 threats to business growth in 2018. |
Echoing the theme of the World Economic Forum this year, CEOs acknowledge that we live in a fractured world. They are divided over whether future economic growth will benefit the many or the few. They see the world moving towards new, multifaceted metrics to measure future prosperity.
Yeoh said: “We can see that CEOs are navigating the fragmentation through the increased concerned for societal threats. This also holds true in Singapore as we enter an era of slower growth, shifting demographics and technological disruption.
“While financial performance is an essential element underpinning any market economy, it cannot be the only measure of success. Broader measures, reflecting targetted outcomes in societal terms, such as quality of life, must also be considered.”
Examining the key challenges to trust for businesses, CEOs admit that delivering results in shorter periods of time (60%) is the main challenge. However, following this, there is a significant shift with the majority reporting higher levels of pressure to hold individual leaders to account (59%), including for misconduct. Over a third report more pressure from employees and customers to take political and social stances (38%) in public.
In the BCM (65%), healthcare (65%) and technology sectors (59%), the profile of leadership accountability was higher than average. High-profile debates on diversity, immigration, social inclusion and pay equity have raised employees’ expectations of leadership to engage in political and social issues, including in China (41%).
Explore:
Download the report
*PwC conducted 1,293 interviews with CEOs in 85 countries between August and November 2017. The sample is weighted by national GDP to ensure that CEOs’ views are fairly represented across all major countries. Eleven percent of the interviews were conducted by telephone, 77% online, and 12% by post or face-to-face. All quantitative interviews were conducted on a confidential basis. Forty percent of companies had revenues of US$1 billion or more: 35% of companies had revenues between US$100 million and US$1 billion; 20% of companies had revenues of up to US$100 million; 56% of companies were privately owned.
*PwC conducted 1,293 interviews with CEOs in 85 countries between August and November 2017. The sample is weighted by national GDP to ensure that CEOs’ views are fairly represented across all major countries. Eleven percent of the interviews were conducted by telephone, 77% online, and 12% by post or face-to-face. All quantitative interviews were conducted on a confidential basis. Forty percent of companies had revenues of US$1 billion or more: 35% of companies had revenues between US$100 million and US$1 billion; 20% of companies had revenues of up to US$100 million; 56% of companies were privately owned.
