The CEO’s Take: Recovery to Be Long, Painful

PwC annual survey shows only 34 percent of chief executives expressing great confidence in growth over the next three years.
Stephen TaubJanuary 28, 2009

CEOs are digging in for a long, painful recovery.

Only 34 percent of chief executives surveyed by PricewaterhouseCoopers are very confident of growth over the next three years, down from 42 percent last year, when CEOs were just beginning to recognize the full impact of the credit crisis on the global economy.

As for the next 12 months, just 21 percent of chief executives said they were very confident of revenue growth over that shorter period, down from 50 percent in last year’s installment of PwC’s annual survey. And more than a quarter of CEOs said they were pessimistic about prospects for the coming year. PwC produced the survey from 1,124 interviews with CEOs in 50 countries during the last quarter of 2008.

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“The speed and intensity of the recession has rocked the psyches of CEOs and created a global crisis of confidence,” said PwC’s Global CEO Samuel A. DiPiazza, Jr. “CEOs are most concerned about the immediate survival of their companies.

CEOs in the developed world, especially North America, are more pessimistic on average than are their counterparts in the rest of the world.

According to the survey, only 15 percent of CEOs in North America and 15 percent in Western Europe expressed confidence about growth prospects for the next 12 months. This compared with 21 percent in the emerging economies of Central and Eastern Europe, 31 percent in Asia Pacific, and 21 percent in Latin America.

Interestingly, despite the recent wave of massive job cuts, only 26 percent of CEOs who participated in the survey said they planned to reduce headcount in the coming year, while 35 percent planned to maintain staffing levels.

The results among CEO respondents reflect some similarity with what the CFO Magazine/Duke University Global Business Outlook Survey has been finding. At the end of November and beginning of December it measured 81 percent of finance executives saying that they were less optimistic than they were last quarter. Most expected their economic misery to last for at least a year. Nearly 60 percent of U.S. finance chiefs in that survey did not expect the domestic economy to begin to recover until the fourth quarter of 2009 or later.

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