A survey of 1,600 chief executives around the world shows record levels of pessimism about growth in the global economy, with only 22% projecting an increased rate of growth.

Business consultancy PwC published the results of its 23rd survey at the World Economic Forum in Davos, saying that pessimism over global economic growth is particularly significant in North America, Western Europe and the Middle East.

PwC Network chairman Bob Moritz said: “Given the lingering uncertainty over trade tensions, geopolitical issues and the lack of agreement on how to deal with climate change, the drop in confidence in economic growth is not surprising – even if the scale of the change in mood is.

“These challenges facing the global economy are not new. However, the scale of them and the speed at which some of them are escalating is new, and the key issue is: how are we going to come together to tackle them?

“On a brighter note, while there is record pessimism amongst business leaders, there are still real opportunities out there. With an agile strategy, a sharp focus on the changing expectations of stakeholders, and the experience many have built up over the last ten years in a challenging environment, business leaders can weather an economic downturn and continue to thrive.”

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CEOs are also not as positive about their own companies’ prospects, with only 27% saying they are “very confident” in their own organisation’s growth over the next 12 months – the lowest level since 2009 and down from 35% last year.

Sentiment Matters

Chief executive sentiment has proven to be an excellent predictor of global economic growth, according to PwC. Analysing forecasts since 2008, the correlation between CEO confidence in their 12-month revenue growth and the actual growth achieved by the global economy has been very close. If the analysis continues to hold, it says, global growth could slow to 2.4% in 2020 below many estimates including the 3.4% October growth prediction from the IMF.

According to PwC Ireland managing partner Feargal O’Rourke (pictured), Ireland is bucking some of the global trends. O’Rourke said: “Our economy is performing well, one of the fastest growing Eurozone economies, unemployment is at a 13-year low and foreign direct investment remains strong. However, as a small open economy dependent on the performance of our global trading partners, business growth in Ireland is likely to remain uncertain for 2020.

“The internal challenges facing Irish companies are similar to these global trends — we must continue to prepare for all Brexit eventualities, for the next year, good and bad. And the availability of key skills, cyber threats and climate change are top of mind. Continuing to think beyond the challenges and invest in these important areas to ensure business models are fit for a digitally enabled sustainable future will be critical.”

Globally, the chief executives expect China to pull level with the US in terms of growth, with 29% of them voting for China as against 30% for the US. The other countries making the top five for growth are unchanged from last year – Germany (13%), India (9%) and the UK (9%), the latter a decent result given the uncertainty created by Brexit.

Trade conflicts, over-regulation, cyber threats and upskilling are among the top ten threats to growth listed by the chiefs — but climate change has not yet shown strongly enough on their radar to make it into the top ten.