Nearly 50% of ceos see global economy worsening further this year: survey

Just 15 per cent of them said the global economy would improve during 2012. Short-term confidence also fell among CEOs in the Asia-Pacific region, to 42 per cent from 54 per cent last year. China saw the biggest decline in the region.

The world economy is interrelated and talk of decoupling or the Asian economy going its own way has not materialised, said PwC International chairman Dennis Nally. But the survey noted that the greatest optimism among CEOs rested with prospects in the emerging markets.

The PwC survey noted, however, that top executives had learned how to manage through difficult and volatile economic times. Forty per cent of them were "very confident" of revenue growth in the next 12 months; although that was down from 48 per cent last year, it was a significant improvement over the 31-per-cent figure in 2010.

The results of the survey were released at the annual World Economic Forum in Davos. It found that 80 per cent of CEOs were most concerned about uncertain economic growth, while 64 per cent worried about the instability in the capital market. Asia-Pacific CEOs ranked exchange-rate uncertainty as their second concern.

"The ongoing debt crisis in the European Union … has deflated confidence in business growth around the world," Nally said. "Even the fast-growing economies of Asian and Latin America are not immune to realities of continued economic stagnation, belying the notion that the global economy has decoupled.

"The good news is that the long cycle of the slowdown has taught CEOs how to manage their businesses with greater efficiency ... many CEOs are confident they can deliver revenue growth despite the difficult conditions."

According to the respondents, the best strategic growth opportunities in the next 12 months will come from increased shares in existing markets and from developing new products and services.

In addition, more than half expect to increase their headcount in the next 12 months – with more hiring anticipated in the media and entertainment sectors than in others.

As expected, the biggest decline in confidence was among European CEOs. But there was also a marked decline in confidence in India, with 55 per cent of chief executives in that country very confident of growth, compared with 88 per cent last year.

Overall, 70 per cent of CEOs plan to make changes to their strategies in the next 12 months, driven primarily by customers’ demands and economic conditions. Cost reduction remains key, though declining in importance.

Finding and keeping the right talent remains a top concern. Only 30 per cent said they were very confident they would have access to the talent needed to execute their company’s strategy and 43 per cent believe that it has become more difficult to hire workers in their industry. Recruiting and retaining high-potential middle managers is the biggest talent challenge, CEOs said, followed by hiring skilled production employees and younger workers.

Nearly 70 per cent of the respondents said they wished they could spend more of their own time developing the leadership and talent in the pipeline, placing this just behind meeting customers as a priority.

The PwC annual CEO survey was conducted in 60 countries |in the last quarter of 2011. |For more information see www.pwc.com/CEOsurvey.