Nearly 60 p.c of CEOs around the globe anticipate international financial progress to extend over the following 12 months, in response to PwC’s twenty eighth Annual International CEO Survey, launched throughout right this moment’s World Financial Discussion board Annual Assembly. The report, which surveyed 4,701 CEOs throughout 109 international locations and territories, additionally finds that 42 p.c of companies anticipate to extend headcount by 5 p.c or extra within the subsequent 12 months – greater than double the proportion who anticipate headcount decreases (17 p.c), and up from 39 p.c final yr. The share is highest (48 p.c) amongst smaller firms (lower than US$100 million) and people within the know-how (61 p.c), actual property (61 p.c), non-public fairness (52 p.c) and pharma and life sciences (51 p.c) sectors.
Whereas CEOs are optimistic in regards to the international financial system, macroeconomic volatility (29 p.c) and inflation (27 p.c) nonetheless stay the highest dangers for the yr forward cited by CEOs globally, however with clear variations between areas. Geopolitical battle is seen as the most important danger within the Center East (41 p.c) and Central and Jap Europe (34 p.c). In Western Europe, cyber danger (27 p.c) is a touch greater concern than a scarcity of expert employees (25 p.c) and inflation (24 p.c) – with macroeconomic volatility topping the checklist at 29 p.c. Inflation is the highest concern in Africa (39 p.c), whereas North America and Asia-Pacific prioritise dangers largely according to the worldwide averages.
According to the final two years, 4 in ten (42 p.c) CEOs imagine their firm won’t be viable past the following decade if it continues on its present path. Amongst these that don’t anticipate to final with out vital change, 42 p.c cite shifts within the regulatory atmosphere as having the most important affect on their financial viability. However CEOs are taking motion – throughout all sectors, nearly two-thirds (63 p.c) have taken at the very least one vital motion to vary how their firm creates, delivers, and captures worth within the final 5 years, with CEOs which have taken extra reinvention actions within the final 5 years reporting greater revenue margins within the final 12 months.
As firms look to reinvent their enterprise fashions, nearly 4 in ten (38 p.c) say they’ve begun competing in at the very least one new sector within the final 5 years – with about one-third (34 p.c) noting this has represented over 20 p.c of firm income over this era.
Nevertheless, the tempo of reinvention is sluggish and a big majority of firms lack agility. In the case of transferring funds and other people between tasks and enterprise items, round half of CEOs informed us that they reallocate 10 p.c or much less of monetary and human sources from yr to yr. Greater than two-thirds reallocate lower than 20 p.c. On common, solely 7 p.c of income over the past 5 years has come from distinct new companies.
GenAI has unrealised potential
CEOs are reporting tangible affect from GenAI. Greater than half (56 p.c) report seeing effectivity beneficial properties of their workers’ time over the past 12 months, and one-third noticed income (32 p.c) will increase. Nevertheless, efficiency is considerably beneath expectations expressed final yr. In 2024, 46 p.c mentioned they anticipated to see profitability enhancements. A yr later, after we requested if that they had seen these beneficial properties, solely 34 p.c mentioned that they had. Belief in AI stays a hurdle to extra widespread adoption. Solely a 3rd of CEOs mentioned they’ve a excessive diploma of belief in embedding the know-how into key processes of their firm.
Regardless of this, optimism about GenAI’s impacts on profitability is barely up on final yr – with 49 p.c anticipating a rise within the subsequent 12 months. Roughly half (47 p.c) anticipate to combine AI (together with GenAI) into their know-how platforms over the following three years, 41 p.c plan to combine it into core enterprise processes and 30 p.c have plans for brand spanking new merchandise and repair improvement.
Whereas it’s early days, there’s nothing in our knowledge to recommend a widespread discount in employment alternatives throughout the worldwide financial system because of GenAI. Extra CEOs say GenAI has elevated headcount than decreased it (17 p.c v 13 p.c).
Local weather investments are paying off
Because the local weather transition continues to affect companies, CEOs proceed to take motion. Once we requested CEOs to take inventory of the monetary affect of local weather associated investments over the past 5 years, we discovered that these strikes had been six instances extra prone to have resulted in elevated income (33 p.c) than decreased income (5 p.c). As well as, practically two-thirds of CEOs reported that local weather associated investments had both diminished prices or had no vital affect on prices.
Nevertheless, challenges stay round initiating local weather associated investments: CEOs that made such investments cite regulatory complexity as the highest issue (24 p.c) inhibiting their firms’ skill to provoke these investments, versus decrease returns on funding (18 p.c) or lack of buy-in from administration or the board (6 p.c).