SA CEOs predict a return to economic growth in 2021 – PwC survey

 A PwC survey of more than 5000 CEOs globally has recorded levels of optimism revealing that a whopping  76% of business leaders expressed faith that global economic growth will improve in 2021.

According to the survey 57% of South African CEOs believe global economic growth will improve over the next 12 months. 

However, some 40% of SA CEOs said they expected to reduce their headcount in 2021, compared to 16% of local business leaders who said they expected to increase their headcount over the next 12 months

“Forty-one percent of South African CEOs are ‘very confident’ about their own organisation’s prospects for growth in 2021,” PwC said.

The survey comes after a global recession of a 3.5% decline in world GDP in 2020 and a GDP contraction of 7% in SA. The figures come from PwC’s 24th Annual Global CEO Survey, which this year polled 5,050 CEOs in 100 countries and territories between January and February 2021.

The percentage of CEOs expressing confidence in growth was up from 22% in 2020 and 42% in 2019, representing the highest level of optimism since the survey started asking this question in 2012. 

“In South Africa, 57% of CEOs believe global economic growth will improve over the next 12 months. South African CEOs are also more optimistic about the outlook for their businesses. Some 41% (compared to 36% globally) of those polled said they are “very confident” about their organisation’s prospects for revenue growth over the next 12 months,” PwC said.

Commenting on the survey results, Dion Shango, CEO of PwC Africa said:

“After a year of economic and political uncertainty coupled with human tragedy, it is encouraging to note an upswing in sentiment among CEOs about global economic growth. Although we are not out of the woods, CEOs see a path forward for the global economy and for their own organisations.”

“As business leaders prepare for a rebound in the economy, a critical question will be: which management approaches should business retain from the rapid response mode most of them adopted during 2020?

“Fast, high quality decision-making is likely to continue to be top of most companies’ ‘keep’ lists. Other priorities include ensuring top management remain focused on the big issues that matter most, engaging with all staff, revisiting critical decisions frequently, and responding early to unintended consequences,” Shango said.

CEOs globally in the technology and telecommunications sectors showed the highest levels of confidence at 45% and 43%, respectively. Meanwhile, CEOs in transportation and logistics (29%) and hospitality and leisure (27%) sectors were among the least confident about their ability to grow revenues over the next 12 months.

The survey findings showed that the US had extended its lead as the number one market that global CEOs are looking to for growth over the next 12 months at 35%, seven percentage points ahead of China at 28%. In 2020, the US was only one percentage point ahead of China.

New political developments and existing tensions have had an impact on the views of US CEOs. They are reducing their emphasis on China as a growth driver and increasing their focus on Canada and Mexico. Meanwhile, China CEOs report growing interest in large economies such as the US, Germany and Japan as prime destinations for exports.

At 17%, Germany held on to its number three spot on the list of growth destinations, while the UK, post-Brexit, moved up to number four (11%), surpassing India (8%). Japan also rose up the ranking to become the sixth most attractive growth destination, overtaking Australia which held that position last year.

South African companies continue to see China (27%) and the UK (27%) as key to growth, but are also looking to other African countries for opportunities such as Ghana (11%), Nigeria (11%) and Kenya (8%).

In view of South Africa’s rising inequality and employment challenges, it was concerning that 51% of SA CEOs (compared to 37% globally) reported that they had reduced staff in the past 12 months and that 41% (compared to 21% globally) plan to do so in the year ahead. 

The proportion of South African CEOs expecting to reduce staff has exceeded those expecting to increase it for the first time, and by a margin of 25 percentage points. This is unprecedented in the history of the survey. The survey findings are based on the economic outlook at the time, namely, a level 3 lockdown period, issues arising from the rollout of vaccinations, as well as load shedding.



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