DGAP-News: CEOs– Confidence Restored to Pre-Crisis Levels as Recession Woes Wane

PwC

25.01.2011 19:00
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Split in Outlook Between Emerging Economies, Developed Nations

Focus on Innovation, Talent, and Workplace Issues in PwC Survey

DAVOS, Switzerland, 2011-01-25 19:00 CET (GLOBE NEWSWIRE) — Two years removed
from the depths of recession, CEOs– confidence in future growth has returned to
nearly pre-crisis levels, according to PwC–s 14th Annual Global CEO Survey. In
the worldwide poll of 1,201 CEOs, 48% said they were –very confident– of growth
in the next 12 months. That–s a major shift from the 31% last year who were
–very confident– last year and approaches the 50% reached in 2008 before the
onslaught of the economic crisis.

In total, 88% of CEOs said they now have some level of confidence for prospects
in the next 12 months, up from 81% last year. Longer term, 94% now are
confident of growth three years from now, an increase of two percentage points.

Renewed confidence was spread across all continents, with CEOs in India,
Austria, Colombia, Peru, China, Thailand and Paraguay particularly upbeat about
near term growth. Regionally, CEOs in Western Europe were the least confident.
German CEOs were an exception, with nearly 80% of CEOs –very confident,– up
from about 20% last year. The survey results were released at the World
Economic Forum annual meeting in Davos.

CEOs said they considered China the most important country for future growth.
China was named by 39% of CEOs, followed by the US, 21%; Brazil, 19%; and
India, 18%. And China, the US and India were seen as the most important future
sources for products and raw materials. Regionally, 90% of CEOs said they
expect their operations to grow in Asia in the next 12 months, followed by
Latin America, 84%; Africa, 75%; the Middle East, 72%; and Eastern Europe, 70%.
But just a third of respondents said the country in which they are based offers
high growth potential.

Strategically, the best opportunities for growth in the next 12 months will
come from the development of new products and services and from increasing
share in existing markets, both cited by 29% of CEOs. New market penetration,
at 17%; mergers and acquisitions, 14%; and new joint ventures and alliances,
10%, trailed as leading growth strategies.

–CEOs have emerged from the bunker mentality of surviving the recession. They
now see renewed opportunity for growth, even in the near term, and are
determined to take advantage of better global economic conditions and increased
customer demands,– said Dennis M. Nally, Chairman of PricewaterhouseCoopers
International.

–The post-recession global economy is recovering on two-tiers. Emerging
economies like China, India and Brazil are growing at rates that far surpass
the developed nations. The shift in the economic balance of power creates
challenges for CEOs in deciding how and where to invest in facilities, people
and innovation. Companies that understand and capitalize on the diverging
growth patterns of the developed and emerging economies will be the winners in
the years ahead,– he added.

The positive momentum in CEO confidence was reflected in hiring plans; more
than half (51%) of CEOs worldwide said they expected to add jobs in the next 12
months, up from 39% in the last survey. CEOs in Central Europe, Asia Pacific
and Africa were particularly bullish about hiring. Significantly, just 16%of
CEOs said they expected to cut their workforce in the coming year, down from
25% last year.

The impact of the recession on strategy was also evident in the survey results.
Most CEOs – 84% – said they had changed their company–s strategy in the past
two years, and about a third said the change was fundamental. Strategic changes
were driven primarily by economic uncertainty, customer requirements, and the
post-recession dynamics in their industry. Most CEOs said they plan to change
their strategies for managing talent (83%), risk (77%), investments (76%), and
organisational structure (74%).

Fewer CEOs, 64%, said they planned to cut costs in the next 12 months, down
from about 70% last year. And 34% said they would complete a merger or
acquisition, half expect to form a new strategic alliance or joint venture, and
31% said they would outsource a business function. Western Europe, Asia and
North America were the most popular venues for M&A.

Other key findings of the 14th Annual PwC Global CEO Survey

Threats to future business:

Nearly three-fourths of CEOs cited uncertain or volatile economic growth as a
potential threat to their business, up from 66% last year. And nearly a third
of CEOs said they were –extremely concerned– about economic prospects. Other
commonly mentioned threats included government response to fiscal deficits,
61%; and over-regulation, 60%; trailed by exchange rate volatility, 54%;
unstable capital markets, 52%; and protectionism, 40%. The spectre of inflation
was cited by less than a third of respondents.

Among business threats, 56% named the availability of key skills, followed by
increasing taxes, 55%, and permanent shifts in consumer behaviours, 48%. A
potential talent shortage was a particular concern in Asia Pacific, Central and
Eastern Europe, the Middle East and Africa.

Global risks cited by CEOs included political instability, 58%, scarcity of
natural resources, 34%, climate change, 27% and natural disasters, 25%.

Government Priorities:

Nearly half of CEOs said the priority of government should be improving the
country–s infrastructure. It was followed by creating and fostering a skilled
workforce, 47%, and ensuring the stability of the financial sector and access
to affordable capital, both 45%. More than 60% of CEOs agreed that public
spending cuts or tax increases would slow their country–s economic growth, and
53% said their company–s taxes would rise because of government reaction to
increasing public debt. Just over a third of CEOs said that their company was
making strategic changes because of public spending cuts or tax increases
either at home or abroad.

The Talent Challenge:

In the continuing war for talent, CEOs identified the major challenges over the
next three years as: a limited supply of candidates with the right skills, 66%,
recruiting and integrating younger employees into the workforce, 54%, losing
top people to competitors, 52%, and providing attractive career paths, 50%. The
top strategies they identified to meet those challenges were: using more
non-financial rewards as motivation,65%, deploying more staff on international
assignments, 59%, and working with government and academia to improve skills,
54%.

Notes to editors

Survey Methodology:

For PwC–s 14th Annual Global CEO Survey, 1,201 interviews were conducted in 69
countries during the last quarter of 2010. By region, 420 interviews were
conducted in Western Europe, 257 in Asia Pacific, 221 in Latin America, 148 in
North America, 98 in Eastern Europe and 57 in the Middle East&Africa.

The full survey report with supporting graphics can be downloaded at
www.pwc.com/ceosurvey.

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2011 PricewaterhouseCoopers. All rights reserved.

CONTACT: Mike Ascolese, PwC
Tel : Tel: +1 (646) 471 8106
e-mail: mike.ascolese@us.pwc.com

Mike Davies, PwC
(On site at Davos) Tel: +44 (0) 78 0397 4136
e-mail: mike.davies@uk.pwc.com

For more details, go to www.pwc.com/ceosurvey
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