Chief Executive Officers (CEOs) in the United States, the Asia Pacific and China are resigned to writing-off 2019 as a bad year for their firms, mostly on account of Trump's trade war with the world.
A new report by professional services firm PricewaterhouseCoopers (PwC) revealed the number of CEOs who believe the global economy will slow this year has jumped to nearly 30% from 5% in 2018. The PwC survey included 1,300 top business leaders.
This rising tide of pessimism extends to corporate earnings. Only 35% of CEOs said they are very confident about their company's growth prospects over the next 12 months, a stunning drop from 42% last year.
"CEOs' views of the global economy mirror the major economic outlooks, which are adjusting their forecasts downward in 2019," said Bob Moritz, PwC global chairman. "With the rise of trade tension and protectionism it stands to reason that confidence is waning."
The report was published to coincide with the annual meeting of the World Economic Forum in Davos, Switzerland, which opened yesterday. A key, and perhaps the most important topic of discussion this year at Davos is the global economic slowdown and its implications for companies and governments.
The PwC report said there exists a broad consistency in what keeps corporate leaders awake at night. These major risks include policy uncertainties; potential shortages of skilled workers and over-regulation.
CEOs in the United States and China are especially concerned about the worsening of trade ties between both countries ignited by Trump's unilateral trade war. The PwC survey reveals that 44% of CEOs in North America are extremely concerned about Trump's trade war compared to 38% in Asia-Pacific.
On the other hand, more than 60% of Chinese CEOs said they are extremely concerned about Trump's trade war. Some four in 10 are shifting production to other countries and delaying capital expenditures needed for growth and expansion.
China's CEOs are notable as being the most proactive and vigorous in pulling every lever to keep their businesses going, said PwC.
Business leaders in China are rethinking their need to do business in the United States. Only 17% of Chinese CEOs in the PwC survey now see the United States as the most important foreign market for their company's growth compared to 59% in 2018.
PwC said the move away from the U.S. market and the shift in Chinese investment to other countries are reactions to the uncertainty surrounding the ongoing trade dispute between the United States and China.
