APEC CEOs Continue to Rely on Trade to Boost Growth?Globally

Key findings from PwC’s 2017 APEC CEO Survey

By Dinh Thi Quynh Van, General Director, PwC Vietnam; Bob Moritz, PwC Global Chairman

This week, we are in Da Nang at the Asia-Pacific Economic Cooperation (APEC) leaders meeting that brings together government and business leaders, where the mood is optimistic and focused on greater connectedness between businesses and organizations. The 21 APEC economies individually and collectively play a critical role in driving global trade and growth.

This year has been one of contrasts. The United States pulled back from the Trans-Pacific Partnership, and we saw a rise in nationalist electoral victories and anti-trade rhetoric around the world. At the same time, international trade flows are picking up, projected to outpace global economic growth in 2017 for the first time in years, according to the World Trade Organization. And recently, all eyes were on China — an APEC member that recently held its 19th Congress — where General Secretary Xi Jinping reaffirmed that China will not close its door to the world and will only “become more and more open.” He committed to adopt policies to promote high-standard liberalization and facilitation of trade and investment.

Against this backdrop, APEC CEOs said they are optimistic and ambitious about increasing their global footprint — in the 2017 PwC APEC CEO survey. Respondents also shared that a large portion of their global investments would be in APEC economies, further strengthening this important group and fueling deals activity. And they are keeping their eye on the effects of automation and consequent workforce readiness — indicating a clear commitment to finding ways for workers to adapt to an era of greater automation and job rebalancing.

We encourage you to explore the full report and our findings, including:

Despite rising trade frictions, trade deals — and their benefits — continue. Far from being deterred by anti-trade rhetoric and actions, 63% of the regional business leaders we surveyed told us they expect their global footprint will expand during the next three years, even as they adapt their strategies to the prospect of increased trade barriers. Trade deals continue, and a quarter of the CEOs we spoke to expect an increase in revenue opportunities over the coming year due to a new trade agreement. That said, the prospect of growing protectionism does cast a shadow. A fifth of the APEC CEOs we surveyed say they’ve experienced an increase in barriers during the past 12 months, and a third see this trend growing.

Increasing interconnectedness among APEC companies. A net 50% (up from 43% last year) of the CEOs we surveyed say they are increasing global investments, with 71% of these increases destined for APEC economies. The combination of significant foreign direct investment — APEC economies pull in almost half of all FDI — and potentially massive investment stimuli — like China’s Belt and Road infrastructure initiative — is potent. Future APEC economic growth is projected to outpace global GDP, increasing to 3.8% in 2017–18. And CEOs are taking note, telling us they are more optimistic today than during the past two years.

Cross-border workarounds to circumvent rising nationalism. Responding to concerns about a more protectionist trade environment, 71% of APEC CEOs surveyed anticipate relying more on business partnerships and joint ventures. Cross-border M&A is expected to remain robust, and has grown faster than trade globally since 2013. Technology also features prominently in these calculations, with the rise of adaptions of technologies such as advanced robotics and 3D printing — combined with policies influencing off-shore costs and benefits — putting a shift toward a “build where you sell” global model on the map.

Accelerating digital workforce readiness. With 58% of the CEOs we surveyed automating some functions at their organisations, creating a digital-ready workforce is essential. APEC CEOs believe that increased business investment in continuous learning is the most effective means to that end. Companies that successfully marry machine learning and other emerging technologies with the necessarily human skills of creativity, leadership and empathy will have a big advantage.

These findings tell us to anticipate an increasingly automated APEC workforce and an increasingly integrated APEC economy, as APEC companies maintain or grow their global footprint. As we kick off this year’s summit, APEC CEOs have much to debate, with Viet Nam being an especially fitting host. With a young, cost-competitive and educated workforce, and a government committed to attracting foreign investors through predictable trade and business policies, Viet Nam is projected to be among the Top 20 world economies by 2050, and among the Top 10 in Asia, according to PwC’s World in 2050 report.

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