Chief executives are more worried than a year ago about the global economic outlook, as deflation stalks Europe and commodity prices wilt, but the United States stands out as a bright spot.
That is the verdict of a worldwide survey of more than 1,300 CEOs, released on the eve of the Jan. 21-24 World Economic Forum annual meeting in Davos, that also found business leaders still moderately confident in their own firms’ ability to grow revenues.
Seven years on from the financial crisis that brought the global economy to the brink, there are a host of new geopolitical issues to worry about today, from turmoil in the Middle East to fighting in Ukraine to protests in Hong Kong.
Those confrontations all have economic knock-ons, adding to a wariness that has been compounded by recent market volatility, including a rocketing Swiss franc which has shocked locals in the ski resort of Davos.
“There’s a fair amount of concern about the economy,” said Dennis Nally, chairman of PricewaterhouseCoopers (PwC) International, which conducted the annual CEO health check.
“There’s probably more negativity thus far in 2015, which is really a continuation of the theme from the fourth quarter of last year.”
Just 37 percent of CEOs think global economic growth will improve in the year ahead, down from 44 percent last year, and 17 percent think growth will decline, more than twice as many as in 2014.
But when it comes to their own businesses, 39 percent of CEOs said they were “very confident” of growing revenues in the next 12 months, an unchanged reading from a year earlier and slightly up from 36 percent in 2013.
That steady internal confidence is helped by the fact executives see opportunities to use technology to move their companies into new business areas.
EMERGING MARKETS LOSE SHINE
The pendulum has swung further away from many emerging markets over the past year, with the notable exception of India, where the arrival of pro-business Prime Minister Narendra Modi has made the country’s CEOs the most confident in the world.
Russia, however, has plunged from top of the confidence table a year ago to having the gloomiest business leaders, as a tumbling oil price and Western sanctions take a heavy toll.
Confidence in China, too, is down and the country is no longer the automatic go-to market for multinationals.
Instead, for the first time since the question was asked five years ago, the United States has overtaken China as CEOs’ most important overseas growth market.
With the U.S. economy some 7 percent larger than before the financial crisis and more jobs having been created than were lost, executives see a strong case for investing in a country that remains a hub of technological innovation.
That echoes a report earlier on Tuesday from the International Monetary Fund, which lowered its forecast for global economic growth in 2015 but raised it for the United States.
It rings true, too, for Barry Salzberg, global CEO of Deloitte, a rival to PwC in the audit and consulting business.
“You can sense that things in the U.S. are getting better, while the euro zone has big economic challenges and China’s economy has slowed,” Salzberg told Reuters.