Business leaders and economists give gloomy outlook before Davos

Business leaders are more pessimistic about global prospects than at any stage in more than a decade, according to a new survey released by PwC on the eve of the World Economic Forum (WEF) in Davos.

Meanwhile, a separate poll carried out by the WEF found that two-thirds of chief economists across the private and public sector expect a global recession to set in this year, as the effects of the ongoing war in Ukraine, cost-of-living crisis and rising interest rates weigh on consumers and businesses.

Almost three-quarters of the 4,410 chief executives surveyed by PwC in 105 countries late last year, including in the Republic, said they believe global economic growth will decline over the next 12 months. Inflation, macroeconomic volatility and geopolitical conflict ranked as the three top global threats.

Only 42 per cent of CEOs said that they were confident about their own company’s growth prospects over the next 12 months, down from a level of 56 per cent recorded a year earlier, according to the PwC Global CEO Survey. The 26 per cent slump in this measure was the biggest since the 2008-2009 financial crisis, when a 58 per cent decline was recorded.

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Leaders must look beyond today’s crises to invest in food and energy innovation, education and skills development, and in job-creating, high-potential markets of tomorrow. There is no time to lose.

—  Saadia Zahidi, WEF managing director

Two in five CEOs said that their organisations will not be economically viable in a decade if they continued on the current path, with telecoms, manufacturing and technology groups registering the highest level of concern.

“A volatile economy, decades-high inflation, and geopolitical conflict have contributed to a level of CEO pessimism not seen in over a decade,” said Bob Moritz, global chairman of PwC. “The world continues to change at a relentless pace, and the risks facing organisations, people – and the planet – will only continue to rise.”

Only one-third of chief economists across 22 international organisations, including the International Monetary Fund (IMF), investment banks, multinationals and reinsurance groups, expect a global recession to be averted this year, according to the WEF survey.

“With two-thirds of chief economists expecting a worldwide recession in 2023, the global economy is in a precarious position. The current high inflation, low growth, high debt and high fragmentation environment reduces incentives for the investments needed to get back to growth and raise living standards for the world’s most vulnerable,” said Saadia Zahidi, managing director at the WEF. “Leaders must look beyond today’s crises to invest in food and energy innovation, education and skills development, and in job-creating, high-potential markets of tomorrow. There is no time to lose.”

The publication of the two surveys comes only days after the World Bank warned that the global economy is “perilously close to falling into recession”, as it slashed its forecast for gross domestic product (GDP) growth for 2023 to 1.7 per cent from 3 per cent previously.

About 2,700 politicians, business leaders, academics and officials from international bodies are due to attend the WEF over four days, with the 53rd gathering of the “global elite” falling under the theme “co-operation in a fragmented world”. However, a number of global leaders, including US president Joe Biden, UK prime minister Rishi Sunak and French president Emmanuel Macron, a Davos regular, are giving this year’s event a miss at a time when households are grappling with the cost-of-living crisis.

German chancellor Olaf Scholz is the only G-7 leader scheduled to attend Davos, which will have a strong European political presence this year. Taoiseach Leo Varadkar will join 30 European heads of states and governments attending the WEF, while Minister for Finance Michael McGrath will be among 56 finance ministers from around the globe.