Fear of recession haunts CEOs

2008

Given the turmoil in the global financial markets, it won't come as any great surprise that business confidence is on the decline and fear of recession tops the list of worries that keep CEOs awake at night.

As the movers and shakers gather for the World Economic Forum in Davos, PriceWaterhouse Coopers's 11th annual Global CEO Survey has revealed the first fall in CEO confidence for the year ahead since 2003, with the spectre of a U.S. slump overshadowing over-regulation as the number one risk to their business for the first time in the survey's history.

Terrorism and the threat of pandemic, once major CEO concerns, were cited by only 31 percent and 28 percent of respondents, respectively. Other risks to growth such as energy supply, global climate change, and terrorism also declined as business threats.

The drop in confidence is particularly pronounced in The North America, where just 35 percent of CEOs said they were 'very confident' about growth, compared to 53 percent last year, a decline of more than a third.

Confidence among Western European CEOs also declined to 44 percent, down by eight percentage points.

In sharp contrast, CEO confidence in the surging economies of Asia Pacific, Latin America, and Central and Eastern Europe, actually increased, rising to about 55 percent in each of those regions.

This growing confidence is especially strong in China and India – where 73 percent and 90 percent of CEOs, respectively, said they were very confident about the prospects for growth in the next 12 months.

"The credit crunch and the slowdown in the Western economies have created a clear split in the confidence levels of CEOs around the world," said Samuel A. DiPiazza, PwC's Global CEO.

"The possibility that the downturn could worsen into recession looms large for CEOs in established economies like the U.S. and Western Europe. In the newly-emerged economies CEO confidence remains strong, perhaps because they have experienced nothing but rapid expansion for a decade or more."

But despite looming economic woes, the survey underlined the fact that the war for talent is continuing to rage, with more than two-thirds of all CEOs –85 percent in North America – saying that their time was best spent dealing with people issues.

CEOs in Asia Pacific, despite the region's substantial working age populations, were the most concerned over the availability of key skills. Asia Pacific CEOs were most likely to believe that their organisation needs to change the way it develops talent.

CEOs said that combined technical and business experience, global work experience and leadership skills are the most difficult areas for their companies to recruit. Global experience, however, was ranked last among a list of skills that are critical to their organisation.

"Making sure that their companies have the right talent in place remains a core issue for CEOs around the world," Mr. DiPiazza said.

"Regardless of the other issues swirling around them, CEOs clearly understand that having people with the right balance of commercial, technical and management skills is the key to success in their organisation."