ASEAN CEOs the most pessimistic for 2019 shows PwC global survey

24 January 2019 4 min. read

The results are in for this year’s PwC annual global CEO survey, and chiefs in the ASEAN bloc are especially gloomy as to growth expectations for the year ahead.

Big Four professional services firm PwC has released the 22nd edition of its keenly anticipated Annual Global CEO survey to commence proceedings at Davos, and, after a record jump in optimism last year, the world’s business leaders have grown glum as to the prospect for global economic growth in 2019 – this year returning a record, six-fold spike in pessimistic responses. And those in ASEAN are well above the global average in expecting a downturn.

Carried out among 1,378 chief executives from more than 90 territories toward the end of last year, with half of the respondents representing organisations with revenues in excess of $1 billion, the annual PwC has become one of the most reliable indicators for the coming shape of global economy. This year, the ratio of CEOs who believed there would be a decline in global growth was 29 percent – compared to just 5 percent on last year’s survey.Pessimism rises six-fold among global CEOs for 2019 In addition, the number of CEOs who remain faithful as to positive growth in the coming twelve months has dropped fifteen points from last year’s high of 57 percent to just 42 percent. And the outlook gets worse. CEO confidence in the revenue growth prospects for their own organisations in the year ahead has dropped to barely a third – the lowest level since 2010 – while the three-year outlook, usually a bastion of positivity, has declined sharply to 36 percent.

In 2017, this medium-term figure stood at 51 percent, and hasn’t dropped below 46 percent since 2009 – when it was roughly at the same level as now (34 percent). ‘When taken as a whole, the CEO confidence story is a sobering one,” notes the PwC report, which this year looked back to assess the predictive accuracy of its CEO survey, finding a clear correlation between business sentiment and the rate of global GDP growth in the year to follow.CEO confidence a barometer for global GDPAs for the ASEAN region, the outlook is even bleaker. 46 percent of locally-operating CEOs believe the global economy is set for a GDP downturn in the year ahead, eclipsing even the most pessimistic Middle East cohort, and well above the Asia Pacific rate of 36 percent. The number of ASEAN CEOs forecasting an improvement is also lower than the global average, at 32 against 42 percent. Notably, 83 percent of local CEOs cited trade conflicts as of major concern.

“With the rise of trade tension and protectionism it stands to reason that business confidence is waning,” said PwC Singapore executive chairman Yeoh Oon Jin. “This is especially so in ASEAN this year, with ASEAN CEOs showing even greater pessimism than their Global counterparts. This is in stark contrast to sentiments over the past few years where we have been seeing greater optimism in Asia.”Optimistic and pessimistic outlooks of CEO’s worldwideIn respect to the trade spat and broader policy uncertainty (the latter cited by 78 percent of ASEAN CEOs as of serious concern), the survey also revealed that a majority of CEOs in Southeast Asia are already taking a strong reactive approach, with 29 percent each stating that they were adjusting their supply chain/sourcing strategies and/or delaying capex, and 17 percent saying they are adjusting their growth strategy to different countries.

The bright side? PwC’s APAC CEO survey released in conjunction with last year’s APEC CEO summit demonstrated the high level of sensitivity to trade policy uncertainty, with 59 percent of those surveyed by June 21st stating a high level of confidence for revenue growth, and that rate dropping to just 20 percent a week later as US/China trade tariffs loomed. For this year’s global survey, ‘policy uncertainty’ has emerged from nowhere as the second greatest CEO concern.

PwC’s global chairman Bob Moritz however contends that this is only part of the picture. In an interview with CNBC on the question of whether the upcoming meeting between Washington and Beijing might improve sentiment should a deal arise, Moritz said; “I’m not sure it’s going to remove all of the pessimism. When you take a look at economic factors and trends, even those trade conflicts, it’ll actually reduce the risk there, but necessarily not make it go away.”

Related: ASEAN could benefit from US-China trade spat due to supply chain rethink