Venkat Raman
Chief Executives in New Zealand have taken a pessimistic view of the global economic growth in 2019, with the number of ‘bulls’ declining this year, compared to 2018, according to the 2019 CEOs Survey of PricewaterhouseCoopers (PwC).
The firms’ Chief Executive Mark Averill said that the outlook of CEOs is markedly different now to the expectations expressed around the same time last year.
“Any optimism that our CEOs felt last year has fallen sharply. A standout from this year’s Survey is how severely the enthusiasm about global economic growth has dropped, with New Zealand CEOs among the most pessimistic,” he said in his Executive Summary.
The Report said that CEOs are also pessimistic about the growth of their own organisations.
Confidence level drops
According to the Survey Report, many CEOS are worried that the future appears uncertain.
“Whether it is Brexit, potential trade conflicts or government policy, many CEOs see a more unsettled future. New Zealand CEOs are considerably more gloomy than their peers. Over half of our CEOs (51%) believe global economic growth will decline in the next 12 months compared to 32% in Australia and 29% globally. It is a sharp rise in pessimism for CEOs in this country, up from 19% in 2018 and 16% in 2017,” the Report said.
CEOs’ bullishness about their own growth prospects has dropped from 38% being ‘Very Confident’ in 2018 to 26% in 2019.
Mr Averill said that with the wave of protectionism and populism sweeping the globe, as well as the increasing speed of technological change, it is not surprising that CEOs are looking ahead and seeing an uncertain future.
Domestic threats
“For New Zealand CEOs, however, domestic matters are seen as the greatest threats to growth alongside any factors that could impact the ease of doing business. This year, we used the CEO Survey as an opportunity to drill down into leaders’ thoughts on artificial intelligence (AI),” he said.
The level of uncertainty about what lies ahead seems to be pronounced.
Mr Averill said that New Zealand CEOs recognise the transformative power of AI but only 32% have introduced AI initiatives into their business.
“Opinions on the reach of AI and the consequences it could have not only on the workforce but also on the society are divided. The Government’s role in implementation and development is also up for debate with many CEOs seeing AI as something that’s beyond traditional governing bodies,” Mr Averill said.
The Downbeat trend
The PwC Survey found that fewer CEOs took a neutral stance saying that the global economy and prospects for growth in New Zealand will ‘stay the same.’
“This downbeat trend is mirrored in CEOs’ confidence about revenue growth in their own organisations. While over a quarter (26%) are Very Confident, they will achieve growth in the next year, it is a considerable drop from 38% last year and indicates lower confidence than CEOs globally (35%) or in Australia (40%),” the Survey said.
It said that uncertain economic growth is a major concern for 72% of the respondents.
However, New Zealand CEOs expressed greater optimism in the long-term perspective.
“When asked about revenue growth over the next three years, 30% are ‘Very Confident’ about their prospects. Despite the decreasing optimism, CEOs are still looking to invest in staff numbers, although not at the same rate as previously. 44% expect headcount to increase in the next 12 months compared to 51% in 2018,” the Report said.
Ambivalence towards government
Weakened business confidence in New Zealand has been linked to ambivalence about the new government and a perception that it is less ‘business-friendly.’
Threats related to government policy loomed large for New Zealand CEOs, with 79% pointing to over-regulation and policy uncertainty as key macro threats for business.
When it comes to threats outside these shores, CEOs in New Zealand expressed less concern than their global peers about developments around the world.
“With the rise of populism and protectionism, it is not surprising that geopolitical uncertainty is seen as one of the top three concerns by CEOs both globally (75%) and in Australia (73%). Yet, a comparatively low 61% are troubled in this country,” the Report said.
