Sombre mood at the top dampens the year

PricewaterhouseCoopers Survey – 

New Zealand Chief Executives are less positive about the outlook for the global economy than they were last year, but remain optimistic about their own business growth.

The latest PricewaterhouseCoopers CEO Survey released on February 19, 2016 said that only 23% of the respondents believed that the global economy will improve this year, compared to 47% in 2005. More than half of New Zealand CEOs believe that the global economy will stay about the same this year.

Despite the more challenging outlook for the global economy, 40% of New Zealand respondents are ‘very confident’ about their company’s growth prospects in the coming year and an additional 51% are ‘somewhat confident.’

More resilient

PwC New Zealand Chief Executive Bruce Hassall said that the outlook for New Zealand may prove to be more resilient than many currently believe.

“Given the wide-ranging uncertainties CEOs are facing – cyber security, over-regulation, geopolitical stability – it is easy to see why they are divided about whether there are more threats or opportunities today. But it is not all doom and gloom. Kiwi organisations are remaining optimistic about their own growth prospects despite the possibility of a stagnant or declining global economy,” he said.Sombre mood at the top- What NZ Chief Executives say Web

Threats and opportunities

About 55% of New Zealand CEOs said that there are more opportunities for growth now than three years ago, while 66% said that there are more threats – or depending on your mind set, a business environment plagued by threats but ripe with opportunity!

Mr Hassall said that to equip themselves for this challenge, chief executives are focusing on three core capabilities: addressing greater stakeholder expectations; harnessing talent, innovation and technology; and new metrics for success beyond the bottom line.

“CEOs everywhere are understanding that despite the tremendous challenges they face today, they need to build a business that’s ready for the more complex global marketplace of the future,” he said.

Strategies for growth

CEOs say that they will undertake a number of restructuring activities to strengthen their companies this year. Overall, 64% of the New Zealand respondents said that they will cut costs (compared with 68% globally), 57% will form strategic alliances or joint ventures (49% globally) and 21% will outsource a business process or function (28% globally).

Internationally, global respondents again ranked the US as their most important market for growth over the next 12 months. Overall, 39% of CEOs said that the US is among their top-three overseas growth markets, compared with 34% for China, 19% for Germany, 11% for the UK and 8% for Brazil.

“It has become more difficult to pin down where growth will come from across the globe. China’s economic rebalancing and the fragility of its debt-laden local government and private sector continues to concern investors and rattle entire industries. However, as China slows down overall, the composition of the growth is shifting from an infrastructure-driven economy to consumer spending of the middle rising class, which could bode well for New Zealand’s agrisector,” Mr Hassall said.

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