Nearly 78 per cent of India’s CEOs believe global economic growth will slow over the next 12 months, the most pessimistic outlook since 12 years ago, and a significant shift from the optimistic forecasts of 2021 and 2022, according to a survey by PwC.
However, almost six out of 10 Indian CEOs (57 per cent) expressed optimism about India’s economy over the next 12 months. While only 37 per cent of Asia-Pacific CEOs and 29 per cent of global CEOs expect economic growth to improve in their countries or regions over the next 12 months.
Organisations’ economic viability
Moreover, 41 per cent of CEOs believe that their organisations will not be economically viable in a decade if they continue on their current path. “In particular, 62 per cent of India CEOs believe that changing customer demand will impact profitability in their industry over the next ten years to a large or very large extent, while 54 per cent are concerned about changes in regulations,” noted the survey.
Globally, business confidence around economic growth varies starkly, with the G7 economies — all weighed down by an ongoing energy crisis — being more pessimistic about their domestic growth prospects than they are about global growth: France (70 per cent vs 63 per cent), Germany (94 per cent vs 82 per cent) and the UK (84 per cent vs 71 per cent).
Despite high emphasises on cost cuts, 85 per cent of India CEOs do not plan to reduce headcount, and 96 per cent do not plan to reduce compensation – demonstrating their resolve to retain talent.
Top concerns
The survey states that the impact of the economic downturn is top of mind for India’s CEOs this year, with inflation (35 per cent) and macroeconomic volatility (28 per cent) leading the risks weighing on CEOs’ minds in the short term — the next 12 months — and over the next five years. Climate change is close behind (24 per cet), financial exposure to geopolitical conflict risks (22 per cent) and cyber risks (18 per cent).
The conflict in Ukraine, as well as growing concerns about geopolitical flashpoints in other parts of the world, have caused Indian CEOs to reconsider aspects of their business models, with nearly half of those exposed to geopolitical conflict incorporating a broader range of disruptions into scenario planning and corporate operating models, either by increasing investments in cybersecurity or data privacy (50 percent of those exposed to geopolitical conflict).
“To survive over the next few years, CEOs will need to manage external risks and drive profitability. In the long term they will also need to reimagine, reinvent and reconfigure their businesses and work culture to thrive. Importantly, they need to act on both now, and simultaneously. If organisations are to remain viable in the near and long-term, they must also invest in their people and technological transformation agendas to empower their workforces,” said Sanjeev Krishan, Chairperson, PwC inIndia.
PwC’s 26th Annual Global CEO Survey, polled 4,410 CEOs in 105 countries and territories, including 68 from India between October and November 2022.