Venkat Raman
New Zealand may be one of the best countries in the world to establish and run businesses, but its Chief Executive Officers (CEOs) are among the most pessimistic people in the world, according to the latest PricewaterhouseCoopers (PwC) Survey.
The Survey, released on March 15, 2018, said that only 32% of New Zealand CEOs expect the global economy to improve this year. This contrasts with 59% of CEOS in other countries expressing optimism. China recorded the highest, with 70% of its corporate bosses optimistic of the world economic growth.
Local confidence high
However, New Zealand CEOs were more confident about the growth of their own companies, with 89% of the local respondents saying that they were making plans accordingly.
PwC New Zealand Chief Executive and Senior Partner Mark Averill said that local CEOs were also looking at what they can control, through cost-cutting and building resilience into their supply chain.
“The findings come at a time when businesses are coming to grips with a change in government, a heightened focus on regulation and the broader social and environmental challenges that could affect their growth,” he said.
Uncertain start
According to Mr Averill, New Zealand CEOs faced an uncertain start to 2018, following the general election on September 23, 2017, which coincided with the PwC Survey and a volatile equity markets this year.
“It is no surprise that CEOs here are feeling more cautious. While it might seem like CEOs are pessimistic, our local respondents are bullish about their own growth prospects. They are looking at what they can control; their supply chains and expenses, to get fit for the future,” he said.
The risk factors
Terrorism and cyber-attacks were among the top ten risks that keeps CEOs awake at night, the Survey found.
“CEOs are clearly getting up to speed on digital and technology, but the fact that cyber- attacks are the top risk to growth shows the vulnerability of New Zealand organisations. All businesses are now looking at the people and capabilities that they will need to transform their business models. Digital and cyber security skills are just the beginning; we have to build diverse teams that can cut across traditional business silos,” Mr Averill said.
Among the other facts which CEOs consider as ‘threats’ are over-regulation, climate change and populism.
“Dealing with uncertainty has to be part of business planning for 2018. We have to partner across industries and between government and business to address social issues like cyber security and climate change. This means becoming nimbler and developing a 2018 agenda that is agile enough to handle anything that is thrown their way,” Mr Averill said.
The Global Scene
However, the PwC Global CEO Survey showed a different picture.
Despite highly publicised handwringing over geopolitical uncertainty, corporate misbehaviour and the job-killing potential of Artificial Intelligence, Chief Executives were optimistic of the economic and business environment, at least over the next 12 months.
The Survey accounted for 1293 interviews in 85 countries.
The PwC sample was weighted by national GDP to ensure that CEOs’ views were fairly represented across all major countries. About 11% of the interviews were conducted by telephone, 77% online, and 12% by post or face-to-face. All quantitative interviews were conducted on a confidential basis. The lower threshold for all companies included in the top 10 countries (by GDP) was 500 employees or revenues of more than US$ 50 million. The threshold for companies included in the next 20 countries was more than 100 employees or revenues of more than US$ 10 million.
The Best Year- 2017
According to the Survey, 2017 will turn out to be the best year that the global economy has seen since 2010.
“This rising tide is not just an overall macroeconomic phenomenon; it is balanced across regions. Most of the world’s major economies are experiencing positive growth in contrast to the situation just a few years ago. In 2015, Russia and Brazil were in recessions brought on by plummeting commodity prices and political unrest,” it said.
The southern countries in the Eurozone, notably Greece, were on the brink of default, or in default on their debt and threatening to bring down the Euro.
“China’s surging growth had taken a hit from the Shanghai market crash. Now, global commodity prices seem to have stabilised at a moderate level. Russia and Brazil have returned to modest growth; China is doing well, and the Eurozone has mounted a steady recovery that looks set to continue in 2018. Even the UK economy, while slowing this past year, has not yet been severely impacted by Brexit,” the Survey said.
Photo : Mark Averill
