Falling CEO confidence sets scene for anxious Davos

DAVOS, Switzerland Tue Jan 22, 2013 11:32pm IST

Related Topics

DAVOS, Switzerland (Reuters) - Chief executives are less optimistic about short-term growth prospects for their companies than a year ago, according to a survey that offers a reality check on rising stock markets.

Business leaders and policymakers are meeting in Davos in cautious mood, with much of Europe in recession, growth in China and India slowing, and a hoped-for U.S. recovery yet to prove itself.

The annual PricewaterhouseCoopers survey of 1,330 chief executives found only 36 percent were "very confident" of their firm's prospects for revenue growth in the next 12 months, down from 40 percent a year ago. It is the second consecutive year of falling confidence.

Latin America was the only region to buck the global trend, according to the report published on Tuesday as 2,500 delegates, including 1,600 business leaders, gathered in the Swiss Alps for the annual World Economic Forum.

Unsurprisingly, European CEOs were the most pessimistic, with just 22 percent very confident of growth, down from 27 percent last year. Confidence in North America also fell to 33 percent from 42 percent, while Asia slipped to 36 percent from 42 percent.

Even business leaders in Africa - now widely touted as the next high-growth region - were less upbeat than a year ago.

"CEOs see a global economy that is reluctant to recover and that clearly impacts how they think about their own companies' prospects," said Dennis Nally, chairman of PricewaterhouseCoopers International.

"They are running their businesses cautiously, not really prepared to make any significant investments or additions to headcounts until they can get some more clarity."

Companies have responded to tough times by managing operations more tightly. That means cost cutting remains a priority and ambitious investment projects, including big acquisitions, are off the agenda for now.

Continuing uncertainty over economic growth tops the list of CEO concerns, with the problems caused by governments running unsustainable fiscal deficits ranking second. Other issues also keeping company managers awake at night include concerns about excessive regulation and the instability of capital markets.

The prevailing business mood paints a bleak picture for job prospects, with only 45 percent of CEOs planning to recruit in 2013 - down from 51 percent in 2012 - while 23 percent intend to reduce the size of their workforce.

(Editing by Peter Graff)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Back to Investors

REUTERS SHOWCASE

Health Reforms

Health Reforms

India reviews state hospitals to end widespread corruption.  Full Article 

New Rules

New Rules

RBI says all companies must apply 2-step payments for credit cards.  Full Article 

Still Popular

Still Popular

Indians keep faith with Modi, best hope for economy - poll.  Full Article 

New Adviser

New Adviser

Arvind Subramanian likely to be chief econ adviser.  Full Article 

Pricing Mechanism

Pricing Mechanism

Govt sets up a four-member panel to re-examine gas pricing.  Full Article 

Royalty Rates

Royalty Rates

India to hike iron ore royalty, miners may struggle to pass on extra cost.  Full Article 

Diesel Deregulation

Diesel Deregulation

Oil ministry to seek Cabinet nod on diesel deregulation - sources  Full Article 

Commodities

Commodities

Gold near two-month low; set for weekly drop on interest rate fears  Full Article 

Helping Regional Mills

Helping Regional Mills

Govt raises sugar import duty to 25 pct from 15 pct.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage