Published on the 07/03/2018 | Written by Jonathan Cotton
PwC's 21st CEO Survey takes a look inside the mind of chief executives to reveal a world of optimism - and a fair dose of anxiety - as CEOs struggle with intelligence tech and tax reform...
Good news first: The 2018 survey from PwC records the highest-ever jump in CEO optimism – both global and domestic – regarding global growth for the next 12 months.
“If 2017 was Australia’s year of optimism for business and economic growth, then 2018 is the world’s. Australia’s CEOs remain upbeat: 59 percent expect global economic growth to improve over the next 12 months (the highest-recorded level of optimism for this survey).”
“Global CEOs are increasingly positive too: 57 percent say they believe global economic growth will improve in the next 12 months – almost twice the level of last year.”
There are good reasons for the bright outlook. Stock markets are booming and GDPs are predicted to grow in most major markets. Optimism among Australia’s CEOs for their own growth prospects over the next 12 months is riding high (46 percent report being “very confident”) alongside business leaders from the US (52 percent) and the ASEAN countries as a group (44 percent).
It’s not unbridled optimism however. While confidence is high for the short term there is concern in some quarters that without significant tax reform Australia’s relevance for global capital will continue to decline.
“Domestically the economy’s transition from mining to services is almost complete and this is expected to assist growth,” says the report. “But the Australian economy is not growing where it should, despite employment rising every month in 2017 (for the first time in four decades according to the Australian Bureau of Statistics).”
“The world’s business community is taking notice of the most comprehensive tax reform in recent US history. Australia should be concerned because the US is the biggest investor in Australia ($860 billion, which is $345 billion more than our second biggest investor, the UK, and more than 10 times that of China).”
“The world is taking notice of the most comprehensive tax reform in recent US history. Australia should be concerned because the US is the biggest investor in Australia – more than 10 times that of China.”
“This ‘America First’ approach from the US Trump Administration significantly risks making Australia a less attractive place to invest.”
Even more troublingly, Australia has recently dropped out of the top 10 destinations for global capital, falling from 10th position in 2017 to 11th in 2018.
With Australia now one of the highest taxing nations in the OECD, the concern is that without action to create real and meaningful regulatory change and tax reform, Australia’s global relevance will continue to decline.
“The US is reaping the rewards of substantial changes to its regulatory environment and tax system,” says Luke Sayers, PwC Australia CEO. “These results ring another warning bell for Australia. If we want to remain globally competitive and attract investment, we need tax reform. Otherwise we are at serious risk of foreign direct investment flows slowing as organisations prioritise investment in the US.”
Also on the radar is the burgeoning intelligence revolution, with the ramifications of the new technology proving challenging for CEOs.
“The rapid rate of technology change can be overwhelming for leaders with 73 percent of Australia’s CEOs seeing the speed of technology change as a top threat to growth.
Tech is disruptive and CEOs need to consider new ways to better serve customer needs before a competitor does.”
“AI can transform the productivity and gross domestic product potential of the global economy. In fact it’s forecast to contribute up to $15.7 trillion to the global economy in 2030 which is more than the current output of China and India combined. (Of this $15.7 trillion, $6.6 trillion is likely to come from increased productivity and $9.1 trillion from increased consumer demand.)”
77 percent of Australian CEOs believe changes in core technologies such as AI, robotics or blockchain technologies will be disruptive for businesses over the next five years.
“And they may well be right,” says the report. “AI for example is remarkably complex and advancing quickly. It’s doing far more in some areas (but far less in others) than anyone would have guessed a decade ago and it’s impossible to offer a precise vision of how the next five – much less ten – years will unfold.”
Click here to download the complete PwC 21st CEO Survey.