Bad Business Global CEOs Pessimistic for 2009
A global survey taken among leaders of major companies around the globe has found deep pessimism. Just 21 percent believe that revenues will climb in 2009. Relative to their Western European neighbors, though, the Germans are relatively optimistic.
In years past, the World Economic Forum in Davos, Switzerland has been blasted for being little more than a week of winter-wonderland fun for the over-privileged. This year, though, it promises to have all the levity of a funeral. According to the 2009 Annual Global CEO Survey conducted by the consulting firm PricewaterhouseCoopers, confidence among the global business elite has plummeted to its lowest level since 2003.
Security is high in Davos, Switzerland this week for the World Economic Forum.
"The speed and intensity of the recession has rocked the psyches of CEOs and created a global crisis of confidence," Samuel A. DiPiazza, Jr., who heads up the consulting firm, said in a statement. "CEOs are most concerned about the immediate survival of their companies."
Of particular note is the disappearance of optimism among CEOs in developing economies, which are coming off years of strong growth. In China, the number of managers who are "very confident" about improving revenue in 2009 dropped to 29 percent from a 2008 level of 73 percent. In Russia, the same measure dropped to 30 percent from 73 percent and in Mexico, just 13 percent are certain that 2009 will bring an improvement to their balance sheet, down from a whopping 77 percent just 12 months ago.
Ironically, the study found that among CEOs in the developed world, Germans are relatively optimistic. Just 17 percent of German company heads are very confident their revenues will grow this year -- but that is higher than the 13 percent result for the US, 12 percent for the UK and a paltry 5 percent in France. The small glimmer of relative optimism among the Germans follows a Tuesday report that Germany's Ifo Business Climate Index climbed slightly in January, up to 83 points from a December low of 82.7. The tiny up-tick comes following a forecast by Economics Minister Michael Glos last week indicating that the German economy could return to positive -- though miniscule -- quarterly growth later this year.
PricewaterhouseCoopers questioned 1,124 CEOs from 50 countries around the world. The study found that the pessimism comes largely from widespread concerns about the global nature of the current economic downturn and the difficulties on the financial markets -- problems which have lead a number of companies to postpone infrastructure investments due to the difficulty of obtaining credit. Fully 70 percent of those surveyed suggested they would delay planned investments because of high financing costs.
The study also asked CEOs about subjects unrelated to the current crisis. It was found, for example, that a hefty 83 percent would like to see their governments provide clarity and consistency when it comes to climate change policies. Only 28 percent feel that such clarity currently exists, with the governments of Italy and France receiving among the lowest marks.
cgh -- with wire reports