Sombre view on global economic growth
Five broad megatrends are defining the current business environment, according to CEOs: climate change, technological disruption, demographic shifts, a torn world and social instability. While none of these forces is new, both the magnitude, impact and their interdependence are increasing.
Belgian CEOs view global economic growth more gloomily than in 2021. 81% believe global economic growth will decline over the next 12 months, according to PwC’s 26th Annual Global CEO Survey which polled 4,410 CEOs in 105 countries and territories - including 53 from Belgium - in October and November 2022.
Inflation, macroeconomic volatility and geopolitical conflicts top CEOs’ concerns
While cyber and health risks were the top concerns a year ago, the impact of the economic downturn is top of mind for CEOs this year. High inflation (55%), macroeconomic volatility (53%) and geopolitical conflicts (38%) are the top three threats that Belgian CEOs consider most important in the short term.
In response to the current economic climate, CEOs are looking to cut costs. 55% of Belgian CEOs report reducing operating costs, while 70% report raising prices and 47% are diversifying product and service offerings. 43% say they don’t plan to reduce the size of their workforce in the next 12 months. 60% indicate they don’t plan to reduce staff remuneration to retain talent and mitigate workforce attrition rates.
Companies also continue to invest. Cybersecurity and data privacy are the most important investments CEOs are currently making. 57% of Belgian CEOs say they’ll increase their investments in cybersecurity. In the Netherlands, the figure is 52%, while in Germany as many as 70% of CEOs plan to do so.
Need for transformation
Furthermore, Belgian CEOs expect the climate crisis to impact their cost structure (30%) and logistics chain (26%) in the short term to a (very) large extent, but less their physical infrastructure (8%). With the introduction of various climate taxes at European and national levels, this is no surprise. It’s a major strategic challenge for companies to mitigate climate risks and reduce carbon emissions at the right pace and priority while creating new opportunities for growth.
For the long term, 43% of Belgian CEOs say they would no longer exist in 10 years’ time if their company maintains its current strategic direction. A good strategy with environmental social and governance (ESG) topics at the forefront is becoming crucial for corporate transformation. Especially if companies still want to be economically relevant by 2030. It really comes down to daring to look beyond the current portfolio of activities and products.
Rethinking energy intensity
The results from this 26th edition of our annual survey show that many companies are looking for ways to reduce their carbon footprint and become more sustainable. “It seems that Belgian CEOs are more proactive in this regard than their peers elsewhere in the world”, says Axel Smits, Chairman*, PwC Belgium. A significant 62% state that they’ll invest in adopting alternative energy resources over the next year. Compared to the global average of 34%, this indicates that Belgian CEOs are taking a more driven approach in addressing the energy crisis.
Belgium is one of the most energy intensive countries in Europe. “With the necessity of rethinking the energy intensity as a country, the fact that Belgian CEOs are investing in adopting alternative energy resources is a positive step forward,” Axel Smits notes and further adds that, considering the necessary global reduction in carbon emissions of 15.2% per year as shown by PwC's net zero study, it’s promising that Belgian CEOs are taking steps to contribute to this objective.
* Information correct at time of publication - January 2023
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