Business chiefs are six times more pessimistic about the outlook for global growth than they were a year ago, according to a new survey published on the eve of global political leaders and chief executives gathering at the annual World Economic Forum (WEF) in Davos, Switzerland.
Some 30 per cent of 1,300 chief executives polled by PwC believe that global economic expansion will pull back in the next 12 months, compared to 5 per cent as the forum got under way a year ago.
“CEOs’ views of the global economy mirror the major economic outlooks, which are adjusting their forecasts downward in 2019,” said Bob Moritz, global chairman of PwC. “With the rise of trade tension and protectionism, it stands to reason that confidence is waning.”
The International Monetary Fund (IMF) moved on Monday to downgrade its global growth forecast for this year and next, and warned that the biggest economic risks were the US-China trade war and the possibility of the UK crashing out of the EU in March without a deal.
Hopes that the 49th WEF in Davos might deliver a breakthrough in the US’s trade war with China were quashed late last week when US president Donald Trump, who had already pulled what would have been his second trip in a row to the WEF, cancelled the plans of other top White House officials to attend.
Chinese vice-president Wang Qishan, however, is set to give a special address at the WEF which may outline what damage the US trade standoff is causing his country’s economy at a time when its growth is already slowing.
Significant progress on other global challenges – from slowing growth to the rise in protectionism, cybersecurity, and climate change – is looking less likely as other world leaders that made high-profile speeches at the forum last year have opted to stay at home to tend to domestic problems.
These include British prime minister Theresa May, who is grappling with Brexit, and French president Emmanuel Macron, who has had to contend with weeks of protests in his country.
However, Taoiseach Leo Varadkar and Minister for Finance Paschal Donohoe will be among the 3,000-plus delegates attending the forum.
Growth
The PwC survey found that the level of US chief executives that are confident about their own company’s growth prospects over the next 12 months has fallen to 39 per cent from 52 per cent a year ago.
In China, optimism has fallen to 35 per cent from 40 per cent, while in Germany the ratio has fallen to 20 per cent.
Irish chief executives are mostly concerned about Brexit, according to PwC Ireland’s managing partner Feargal O’Rourke.
“With ongoing political chaos in the UK, businesses still have no clarity, and the risk of a disorderly Brexit on March 29th has increased,” Mr O’Rourke said. “Irish businesses need to intensify their no-deal contingency planning.”
Mr O’Rourke said that based on his firm’s conversations with clients, many Irish business leaders continued to be upbeat about the domestic economy and growth potential of their businesses “despite external uncertainties such as Brexit, global trade wars and a changing tax landscape”.
