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PwC: Seven out of ten company managers expect world economy drop in 2023
Most company CEOs (73%) expect a world economy drop in 2023, according to the 26th edition of PwC CEO Survey, released on Tuesday.
The answer reflects the most pessimistic prospects in the last 12 years, since the question was included in the survey. Moreover, the perception was reversed, compared to 2021 and 2022 when 76% of respondents estimated that the economy would improve its growth rate.
“These past years submitted the whole society to a resistance test: pandemic, war, energy crisis, record inflation, higher interest rates, so that the pessimism expressed in the present survey is not surprising. However, CEOs in Romania are confident in the evolution of the national economy rather than in that of world economy, considering that 62% of them estimate a local slowdown against 75% who anticipate decline at global level. Although perception of the macroeconomic situation worsened, leaders of our country are more optimistic about the companies they are heads of, more than half anticipating the increase of business in the following year, which means that strategies have been built, taking into acount a potential economy drop,”said Dinu Bumbacea, Country Managing Partner PwC Romania.
Economic growth for Romania, in 2023, is estimated at 2.6% by the World Bank, 3.1% by the International Monetary Fund and 1.8% by te European Commission, which foresees slower increases for EU (0.3%) or for states in the area: Bulgaria (1.1%), Hungary (0.1%) and Poland (0.7%).
According to the survey, developed economies such as France, Germany and Great Britain have more pessimistic expectations for domestic growths rther than for those of world economy, compared to the United States, Brazil, India and China.
At the same time, 40% of CEOs think that their organizations will no longer be economically viable in the next 10 years if present conditions persist.
This tendency was mentioned especially in telecommunications (46%), production (43%), health (42%) and technology (41%).
In comparison, 27% of CEOs in Romania have this opinion about companies they are heads of, although they foresee many challenges in the next ten years, for the profitability of industries they are part of.
As for prospects of business increases in the following year, the percentage of CEOs very confident in the development of business at world level was 42%, representing the most important drop since the 2008-2009 financial crisis.
According to the survey, the top of CEO preoccupations include: inflation, macroeconomic volatility and geopolitical conflicts.
While a year ago, cyber and health risks were the main preoccupations, in 2023, inflation impact (40%) and macroeconomic volatility (31%) both on a short term and one in the next 5 years, represent the highest worries.
In their turn, CEOs in Romania see inflation as the main risk for business development (48%), followed by geopolitical conflict (42%) and macroeconomic volatility (38%).
According to the survey, CEOs reduce costs but avoid salary drops or dismissals.
Answering short term economic challenges, CEOs say they adopt measures to stimulate income increase and reduce costs.
“It is interesting that, although 52% of respondents started reducing costs, only 19% froze employments, while 60% do not intend to reduce staff in the next 12 months. This approach is in contrast with that of the 2008 financial crisis when many CEOs anticipated short term staff cuts. At the same time, 80% do not intend to reduce salaries, in order to keep talents and cut resignations,” survey authors point out.
Survey data suggest that CEOs avoid dismissals also because of the recent experience with the “big dismissal” phenomenon.
CEO Survey 2923 explores opinions of over 4,400 CEOs in the whole world, Romania included. The full CEO Survey 2023 report for Romania will be released in March.
PwC is a company network in 152 countries with more than 328,000 professionals offering quality services in the field of audit, fiscal consulting and business consulting.