How business can still grow as CEOs become more cautious about the economy: Findings from PwC’s 2019 CEO Survey

Economists and analysts have been telling us for a while that there is uncertainty in the global economy. And, it appears that business leaders are starting to agree according to PwC's 2019 Global CEO Survey. CEOs are tempering their expectations and are more cautious, if not pessimistic, about global growth this year. 

Given heightened trade tensions, growing market volatility, and political uncertainty around the world, CEOs’ sentiments about the economy in 2019 are in stark contrast to last year when optimism was at an all-time high. 

This year, US CEOs are pretty evenly divided on whether global growth will improve (36%), decline (31%) or stay the same (33%). But in comparison to last year, pessimism about the economy has definitely risen. In 2018, only 2% of US CEOs believed global growth would decline -- This year, that pessimism has jumped by 29 percentage points.

It’s no surprise that CEOs are less optimistic about the global economy with growing trade tensions between the United States and China, as well as increased tariffs and protectionist policies. For US CEOs, both trade conflicts and protectionism now rank in their top five concerns impacting business (number 2 and 5 respective); last year, neither made the top five. 

But even with this less-than-rosy economic outlook, CEOs still have an opportunity to shore up growth within their companies. In fact, insights from our 22nd Annual Global CEO Survey -- which interviewed 1,378 CEOs in 91 countries (132 from the US) -- tells us just how business leaders plan on doing this in an environment where external forces are placing downward pressure on growth.

Maintaining optimism is the name of the game and in the face of economic headwinds, CEOs must remain optimistic in order to drive revenue growth. And in my experience, CEOs are generally an optimistic group. In fact, 91% of US CEOs are still either somewhat or very confident that their companies will continue to grow over the next 12 months. 

How do they plan on achieving this growth despite the breadth of external challenges? 

CEOs are resilient and they will adapt their business plans and strategies accordingly. For example, two-thirds of the US CEOs we surveyed who said “they are extremely concerned about trade conflicts” told us they plan to adjust their supply chain and sourcing strategies; 30% of them told us they plan to shift production to other territories.

So while we may have entered a period where business is more prone to external shocks and changes, all is not lost. But in order to win market share and continue to grow in this more difficult economic environment, CEOs can’t just be reactionary to what’s happening externally -- They must hold a steadfast mindset by focusing on what they can control inside their companies. This means making sure that your organization’s business fundamentals are strong. It means investing in your employees and in upskilling them, in building trust in your company with all your customers and stakeholders, and in embarking on digital transformation to future proof your business.

By investing in our employees, CEOs can build a more digitally skilled and inspired workforce that can better adapt to industry disruptions. By building trust, companies can create more loyal consumers, better motivate and retain their employees, and convince their shareholders to invest in them for the long-term. And by pursuing digital transformation, we better equip our organizations to leverage new technologies like artificial intelligence, blockchain, and robotics that will help create efficiencies, increase value, and drive growth even in the face of rapid technological disruption and change.

So even though 2019 may be a year where macroeconomic indicators and external forces are telling us we need to proceed with caution and be more prudent about our growth strategies and expectations, we have to remember that as CEOs we have a responsibility to stay positive and lead in the face of adversity. It is our job as leaders to build businesses that are fundamentally strong so we can continue to support and inspire our employees and to bring value to our customers and shareholders. This becomes even more important if global economic challenges do indeed lie ahead.