CEOs more optimistic this year barely

Jan 22 2014, 22:25 IST
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SummaryAt davos, honchos see firms doing better but worried over slump in emerging markets, stricter regulations.

Business leaders gathering for their annual high-profile networking forum in Davos are feeling a bit better about their companies prospects and a lot more so about the broader economic outlook.

But they still have a long list of worries.

Half a decade on from a financial crisis that brought the world economy to the brink, the immediate threats to corporate profits are receding and chief executives are encouraged by a brightening outlook in both the US and Europe. Yet they do not have to look far for future threats from a worrisome slowdown in emerging markets to uncertainty over the tapering of Federal Reserve stimulus and concerns over increased regulation.

The annual PricewaterhouseCoopers (PwC) survey of more than 1,300 CEOs found that 39% were very confident their companys revenues would grow in 2014, up from 36% a year ago.

While the trend is encouraging, the reading is still down on the 50%-plus levels seen in 2007 and 2008, highlighting how the return to growth remains fragile and uncertain.

Significantly, CEOs were more upbeat in assessing the macroeconomic outlook than that of their own companies, with 44% now believing the global economy will improve in the next 12 months against just 18% a year ago.

The difference reflects the fact that economic issues are not the only ones weighing on executives minds, according to Dennis Nally, the chairman of PwC International, who presented the findings on the eve of the January 22-25 World Economic Forum.

Even though there is a higher degree of optimism about the global economy, there are still some pretty big challenges elsewhere to do with the volatility of certain economies, concerns around regulation and shifts in technology, he said.

In fact, concerns about over-regulation have moved to the top of the agenda in the past year as new rules many of which have been debated since 2008 are now being implemented, raising the cost of compliance and taking up management time.

The weakness in some emerging markets and uncertainties about where this leaves corporate strategies is a big talking-point for many multinational companies, since it coincides with recovery in the West and signs of progress in Japans efforts to counter years of economic stagnation.

In response, a number of CEOs are turning back to advanced economies for growth, with the US, Germany and UK now seen as more promising than previous high-flyers such as India and Brazil.

Nally said the trend was a key headline

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