Thirty percent of CEOs around the world predict a drop in global economic growth this year—nearly six times the level of last year, according to a new global CEO survey released by PwC prior to the World Economic Forum in Davos, Switzerland. Just 5 percent of global CEOs made the same prediction in 2018. The survey involved 1,378 chief executive officers in over 90 territories.
“The rise in relative pessimism evidenced in the survey is not that surprising,” according to the PwC. “Most major economic models have adjusted their 2019 forecasts downward. In fact, many economists see a slowdown as overdue. International trade tensions, political upset and uncertainty, and stricter monetary and fiscal policy all play out differently but with the same general result across regions: a more cautious outlook on global economic growth.”
The bleak forecast is based on the world’s policy shifts, which are causing frictions between countries. “If CEOs’ confidence continues to be a leading indicator, global economic growth will slow down in 2019,” according to PwC.
Global CEOs have many concerns, including over-regulation, policy uncertainty and trade conflicts. They’ve also indicated lower confidence in their corporations’ revenue outlook for the upcoming year and three-year period.
Those surveyed were most pessimistic about the Middle East and Europe. North American CEOs’ optimism dropped most significantly from 63 percent to 37 percent, and the percentage indicating a slowdown in global growth moved from 3 percent to 28 percent.
Some of this pessimism may be attributed to policies coming from Washington. Trade friction with China doesn’t help.
Meanwhile, the United States is losing ground as the most desired country for investment outside of a CEO’s territory. The percentage of CEOs picking America as a place for top market growth dropped 41 percent in the past year.
“Number one was always the US, in the last couple of years, and then China. Both of them have still remained one and two, but have come down significantly, opening the door for other countries,” PwC’s global chairman Bob Moritz told CNBC. “India is one of those countries. When you look at what Prime Minister Modi has done to that country.”