CEOs expect better earnings in 2021

CEOs are more optimistic about the outlook for their businesses. Some 36 per cent of those polled said they are “very confident” about their organisation’s prospects for revenue growth over the next 12 months, up from 27 per cent of CEOs in 2020. This is an important change in sentiment.

The figures come from PwC’s 24th Annual Global CEO Survey, which this year polled 5,050 business leaders in 100 countries over January and February 2021.

The percentage of CEOs expressing confidence in growth prospects for 2021 is significantly up, as the same percentages for 2020 2019 were 22 per cent and 42 per cent respectively. This year’s percentage represents the highest level of optimism since the survey started asking this question in 2012.

While global confidence is up, there is wide variation across industries, reflecting the varying degrees to which consumer behaviour has been impacted by the pandemic.

“After a year of human tragedy and extensive economic hardship, it is encouraging to see that the people responsible for making investment decisions and hiring staff are feeling cautiously optimistic about the year ahead. CEOs have faith that growth will return, boosted by the rapid development of vaccines and their rollout in many parts of the world,” said Bob Moritz, Chairman of the PwC Network.

There is, moreover, significantly improved confidence in recovery.

CEOs are voicing record levels of optimism in the global economic recovery, with 76 per cent of global business leaders predicting that economic growth will improve in 2021.

The survey findings show that the US has extended its lead as the number one market that CEOs are looking to for growth over the next 12 months at 35 per cent, seven percentage points ahead of China at 28 per cent. In 2020, the US was only one percentage point ahead of China.

At 17 per cent, Germany holds on to its number three spot on the list of growth destinations, while the UK, post-Brexit, moves up to number four (11 per cent), surpassing India (8 per cent).

Not surprisingly, pandemics and health crises top the list of threats to growth prospects, overtaking the fear of over-regulation, which has been the perennial number one concern for CEOs on a global level since 2014.

Rising digitisation is increasing the risks posed by cyber threats. This, coupled with the increase in cybersecurity incidents in 2020 including ransomware attacks, has resulted in cyber threats leaping up the list to become the number two concern, cited by 47 per cent of CEOs compared with 33 per cent in 2020.

Also rising rapidly up the list of CEO concerns is the spread of misinformation (28 per cent, up from 16 per cent in 2020), which has had an impact on elections, reputation, and public health – further contributing to a decline in trust across society.