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Global economy: CEOs' confidence shrinks to lowest

Last updated on: January 25, 2012 13:41 IST

Global economy: CEOs' confidence shrinks to lowest

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As the top leaders from across the world converge in Davos to discuss the business of the world, the CEOs have painted a gloomy picture for global economy in a worldwide survey.

At the same time, the confidence level of the CEOs is relatively better when it comes to the prospects for revenue growth in their own companies, as per the 15th Annual CEO survey released by consultancy major PricewaterhouseCoopers in Davos on Tuesday evening.

The confidence level among Indian CEOs about revenue growth prospects has, however, declined to the lowest in six years, although the percentage of Indian business chiefs being confident about their growth prospects is higher than that of their global peers.

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Image: A fence and barbed wire are placed in front of a sign of the entrance of the congress center where the World Economic Forum held in the Swiss mountain resort of Davos
Photographs: Arnd Wiegmann/Reuters
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Besides, Indian CEOs are also more confident about their hiring plans and a lesser number of business chiefs in India are planning any cost-cutting measures in the next one year.

At the same time, the Indian CEOs are more concerned than their global peers about issues like bribery and corruption, over-regulation, increasing tax burden, exchange rate volatility, government's response to fiscal deficit and debt burden and the government protectionism.

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Image: A member of Swiss special police forces observes from the roof of a hotel covered in snow in Davos.
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As many as 92 per cent Indian CEOs were concerned about bribery and corruption, 89 per cent about uncertain or volatile economic growth, 86 per cent about over-regulation, 83 per cent about growing tax burdens, 80 per cent about forex fluctuations, 79 per cent about fiscal deficit and government borrowings and 75 per cent about government protectionism.

PwC released the survey results here ahead of the World Economic Forum  Annual Meeting 2012, where business and political leaders from across the globe are expected to discuss the global economic slowdown and deteriorating business sentiments, among other issues.

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Image: People walk past the logo of the World Economic Forum in front of the congress centre in Davos.
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Global economy: CEOs' confidence shrinks to lowest

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As per the survey, 55 per cent of Indian CEOs (as against 40 per cent globally) said they were very confident of their revenue growth in 2012.

However, this marks a significant decline from 88 per cent last year and is the lowest in past six years, PwC International chairman Dennis Nally told journalists in Davos.

Africa is the only region where the confidence level has increased to 57 per cent, from 50 per cent a year ago.

For the overall economy, only 15 per cent CEOs globally expect a growth in 2012, although nearly three-times as many CEOs are confident about their revenue growth.

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On a positive note, Nally said, the CEOs are confident about hiring and a majority of them believe that emerging markets are important for their future.

Asked about the decline in confidence level in India and China, despite their high economic growth rates, Nally said it shows how integrated the global economy has become and even the European sovereign debt crisis becomes a matter of concern for businesses across the world.

As per the CEOs, the best strategic growth opportunities would come in the next one year from increasing their share in emerging markets.

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A total of 59 per cent CEOs felt that emerging markets were more important for the future of their companies than the developed markets and identified BRIC (Brazil, Russia, India and China) as their top growth targets.

But despite a sluggish economy, the CEOs were in favour of fresh hiring, while this sentiment was even better in India.

A total of 55 per cent Indian CEO (as against 53 per cent globally) said their have increased their headcount in past one year, while 61 per cent (again higher than 51 per cent globally) said they plan to increase their headcount in 2012.

Also, just 14 per cent Indian CEOs (lower than 18 per cent globally) said they expect to lower their headcount in the next one year.


Image: Souvenirs are seen in a shop window in Davos.
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