Why Business Leaders Are So Pessimistic About Growth In 2019

In PwC’s annual CEO survey, released today, 436 percent more CEOs said they expect global economic growth to ‘decline’ this year more than last. Twenty-nine percent of CEOs of companies around the world expect a decline in the global economy in 2019 versus just five percent last year.

Another study, released yesterday, found just over one in 10 FTSE 350 company secretaries believed global economic conditions will improve over the next 12 months. When the Boardroom Bellwether survey – conducted twice a year by ICSA, a U.K. governance body, and the Financial Times – was conducted in August, that figure was 42 percent.

But behind this growing pessimism is a multitude of factors, not just one, Bob Moritz, PwC’s global chairman told an audience in Davos today. “The dominance of certain risks has come down and has been replaced by a broadening of certain risks.”

PwC chairman Bob Moritz presented PwC’s 22nd Annual Global CEO Survey in Davos today (Rob Kim/Getty Images)GETTY

Top of PwC’s list of threats is over-regulation. But for the first time in the 22 years PwC has polled CEOs, political uncertainty was ranked among the top ten threats. It was positioned second as voted by 35 percent of CEOs.

In a public poll by Deutsche Bank Wealth Management’s Chief Investment Office (CIO) last week, 31 percent predicted a trade war to be the most significant threat to global growth this year.


‘Trade conflicts’ was also a new addition to PwC’s ranking and was placed fourth in its ‘2019 top ten threats’. “The facts are that CEOs believe we are going into a more pessimistic environment and its correlated to where GDP seems to be going,” Moritz said.

The Seeping Gloom Of Brexit

While every region in PwC’s survey saw more CEOs believe in slowing growth, Western Europe saw the largest increase and, with 33 percent predicting ‘decline’, is the second most pessimistic region after the Middle East.

This gloominess seems to be largely driven by Brexit. However, the effect is more profound on the continent than the U.K., those at PwC believe. Kevin Ellis, senior partner and chairman of PwC U.K. said, “U.K. CEOs are backing themselves in spite of that level of uncertainty”.

On the continent, “the confidence level is down as their exports are dependent on the relationship with the U.K.,” Harald Kayser senior partner and chairman of PwC Europe SE told the audience in Davos.

In the ICSA/FT survey, 56 percent of companies are now reporting Brexit as a principal risk.

Davos in Switzerland, where PwC’s CEO report was released and where the World Economic Forum will be hosted on Wednesday. (AP Photo/Markus Schreiber)

Time For Scenario Planning

It is clear from these studies a broad spectrum of threats is fueling pessimism. For CEOs, that means, “You gotta get out of the prediction game”, PwC’s Bob Moritz warned. “The thing we are talking to CEOs about is how do you do more scenario planning.

“Turn every threat into an opportunity. In order to do that you need to surround yourselves with the right talent. Take some risk in a period of uncertainty not avoid it.”


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