Execs’ confidence in global economy falls

CEOs around the world turned less confident in global business prospects for 2017 as geopolitical and reputation risks mount. Most, however, are responding by embracing “disruptive forces” and were optimistic about taking the lead in their respective sectors.

These were some of the results released Thursday by KPMG International of its 2017 Global CEO Outlook, which surveyed about 1,300 top managers across the word’s largest companies.

According to the survey, CEOs across 10 countries were focused on geopolitical challenges. This included the pace of globalization and protectionism, such as the rhetoric being put forward by the administration of US President Donald Trump.

Among global CEOs, 52 percent believed the political landscape had a bigger impact on their companies “than they have seen for many years.” Almost a third of these business leaders expect protectionist policies in their home countries to rise in the next three years.

As such, KPMG said confidence in the global economy this year fell to 65 percent from 80 percent last year.

Despite the drop, global CEOs are more willing to adopt change and are viewing “disruptive forces as an opportunity, not a threat, for their business.”

According to the study, 74 percent of global CEOs said their businesses were aiming to be the disruptors in their sector. In their own businesses, 83 percent of CEOs said they were confident in their growth prospects for the next three years. Half of them said they were “very confident.”

“Disruption has become a fact of life for CEOs and their businesses as they respond to heightened uncertainty,” said John Veihmeyer, Global Chairman of KPMG.

“But importantly, most see disruption as an opportunity to transform their business model, develop new products and services, and reshape their business so it is more successful than ever before. In the face of new challenges and uncertainties, CEOs are feeling urgency to ‘disrupt and grow’,” he added.

New technological breakthroughs will also increase hiring activities especially for specialist employees, the study noted.

“Contrary to popular view, on average, 58 percent of CEOs expect cognitive technologies to increase headcount across 10 key types of roles in the immediate future,” KPMG said.

“While 32 percent expect this growth to be slight, there is still a clear expectation that more specialist employees will be needed, at least in the short term,” it added.

Risks have also evolved, and for the global CEO, a big concern this year is their reputation and brand risk. Cybersecurity is viewed as less of a risk this year “reflecting CEO views on the progress their business has made in cyber risk management.”

Even with the advent of technology, CEOs overwhelmingly agreed that traditional virtues such as trust and good values play a key role in a company’s long-term success.