NASSAU, BAHAMAS — Nearly three quarters (73 percent) of CEOs polled by PwC believe global economic growth will decline over the next 12 months, according to its 26th Annual Global CEO Survey.
The number is lower (62 percent) for CEOs in the Caribbean.
The survey polled 4,410 CEOs in 105 countries and territories in October and November 2022.
The bleak CEO outlook is the most pessimistic CEOs have been regarding global economic growth since PwC began asking this question 12 years ago. Those expectations represented a stark reversal from the last Caribbean participation in the survey (conducted in 2020) when a similar proportion (69%) thought economic growth would improve.
In addition to a challenging environment, nearly one-third of Caribbean CEOs think their organizations will not be economically viable in a decade if they continue on their current path.
The pattern is consistent with global (39 percent) and Latin America (29 percent) though slightly higher than the US (20 percent), UK (22 percent), and Canada (24 percent). Caribbean CEOs’ confidence in their own company’s growth prospects also declined dramatically (by over 40 percent) with less than half being very or extremely confident compared to the survey conducted in 2020 where almost 80 percent were either somewhat confident or very confident about their organization’s prospects for revenue growth over the next year.
CEOs are also seeing multiple direct challenges to profitability within their own industries over the next 10 years. Seventy-six percent believe changing customer demand/preferences will impact profitability, followed by changes in regulation (64 percent) and technology disruptions (60 percent).
While cyber and health risks were the top concerns for Caribbean CEOs the last time they participated in the survey, the impact of the economic downturn is top-of-mind for CEOs this year, with inflation (50 percent) and macroeconomic volatility (36 percent) leading the risks weighing on CEOs in the short-term – the next 12 months – and over the next five years.
Close behind, 26 percent also feel financially exposed to climate change rising to be the top threat over the next 5 years. Cyber risks have fallen dramatically to just 14 percent and although they increase to 26 percent in the medium term, CEOs need to continue to show their commitment to stay ahead of cyber challenges that are still very much on the rise, so they safeguard their business against attacks.
In response to the current economic climate, Caribbean CEOs are looking to cut costs and spur revenue growth. Sixty-two percent report reducing operating costs, while 58 percent report diversifying product and service offerings, and 44 percent raise prices. However, 66 percent say they do not plan to reduce the size of their workforce in the next 12 months. A vast majority – 84 percent – indicate they do not plan to reduce staff remuneration in order to retain talent and mitigate workforce attrition rates.
Prince Rahming, Territory Leader, PwC Bahamas, said: “As revealed in this year’s global CEO Survey, there is a general consensus of the risks and threats facing organizations globally and the Caribbean is no exception. Threats such as inflationary increases and climate change affect us all. In The Bahamas, while we have experienced a rebound in tourism following the relaxation of covid protocols, we are by no means immune to the realities expressed by global CEOs and local businesses would do well to reevaluate their business models in order to thrive in the coming years. There has to be a duality in how we mitigate such threats and short-term risks and how we reinvent our business to ensure long-term sustainability.”
Climate risk featured more prominently – ranking third (26 percent) – as a short-term risk over the next 12 months for Caribbean CEOs compared with Global CEOs. This is in line with how they see climate risk impacting their cost profiles (68 percent), supply chains (58 percent), and physical assets (38 percent) from a moderate to a very large extent. Recognizing how vulnerable the Caribbean is to climate change and the impact it will have on business and society in the near and over the long term, a majority of CEOs have already implemented – or are in the process of implementing – initiatives to reduce their companies’ emissions (52 percent), in addition to innovating new, climate-friendly products and processes (44 percent), or developing data-driven, enterprise-level strategy for reducing emissions and mitigating climate risks (38 percent).
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