Businesses are cautiously optimistic despite economic and technological uncertainty

Almost 60 percent of CEOs around the world expect global economic growth to increase over the next 12 months, according to PwC’s 28th Annual Global CEO Survey, launched during today’s World Economic Forum Annual Meeting. The report, which surveyed 4,701 CEOs across 109 countries and territories, also finds that 42 percent of businesses expect to increase headcount by 5 percent or more in the next 12 months – more than double the proportion who expect headcount decreases (17 percent), and up from 39 percent last year. The percentage is highest (48 percent) among smaller companies (less than US$100 million) and those in the technology (61 percent), real estate (61 percent), private equity (52 percent) and pharma and life sciences (51 percent) sectors.

While CEOs are optimistic about the global economy, macroeconomic volatility (29 percent) and inflation (27 percent) nevertheless remain the top risks for the year ahead cited by CEOs globally, but with clear differences between regions. Geopolitical conflict is seen as the biggest risk in the Middle East (41 percent) and Central and Eastern Europe (34 percent). In Western Europe, cyber risk (27 percent) is a marginally higher concern than a lack of skilled workers (25 percent) and inflation (24 percent) – with macroeconomic volatility topping the list at 29 percent. Inflation is the top concern in Africa (39 percent), while North America and Asia-Pacific prioritise risks largely in line with the global averages.

Consistent with the last two years, four in ten (42 percent) CEOs believe their company will not be viable beyond the next decade if it continues on its current path. Among those that do not expect to last without significant change, 42 percent cite shifts in the regulatory environment as having the biggest influence on their economic viability. But CEOs are taking action – across all sectors, almost two-thirds (63 percent) have taken at least one significant action to change how their company creates, delivers, and captures value in the last five years, with CEOs that have taken more reinvention actions in the last five years reporting higher profit margins in the last 12 months.

As companies look to reinvent their business models, almost four in ten (38 percent) say they have begun competing in at least one new sector in the last five years – with about one-third (34 percent) noting this has represented over 20 percent of company revenue over this period.

However, the pace of reinvention is slow and a large majority of companies lack agility. When it comes to moving budget and people between projects and business units, around half of CEOs told us that they reallocate 10 percent or less of financial and human resources from year to year. More than two-thirds reallocate less than 20 percent. On average, only 7 percent of revenue over the last five years has come from distinct new businesses.

GenAI has unrealised potential 

CEOs are reporting tangible impact from GenAI. More than half (56 percent) report seeing efficiency gains in their employees’ time over the last 12 months, and one-third saw revenue (32 percent) increases. However, performance is somewhat below expectations expressed last year. In 2024, 46 percent said they expected to see profitability improvements. A year later, when we asked if they had seen those gains, only 34 percent said they had. Trust in AI remains a hurdle to more widespread adoption. Only a third of CEOs said they have a high degree of trust in embedding the technology into key processes in their company.

Despite this, optimism about GenAI’s impacts on profitability is slightly up on last year – with 49 percent expecting an increase in the next 12 months. Roughly half (47 percent) expect to integrate AI (including GenAI) into their technology platforms over the next three years, 41 percent plan to integrate it into core business processes and 30 percent have plans for new products and service development.

While it is early days, there is nothing in our data to suggest a widespread reduction in employment opportunities across the global economy as a result of GenAI. More CEOs say GenAI has increased headcount than decreased it (17 percent v 13 percent).

Climate investments are paying off

 As the climate transition continues to impact businesses, CEOs continue to take action. When we asked CEOs to take stock of the financial impact of climate related investments over the last five years, we found that these moves were six times more likely to have resulted in increased revenue (33 percent) than decreased revenue (5 percent). In addition, nearly two-thirds of CEOs reported that climate related investments had either reduced costs or had no significant impact on costs.

However, challenges remain around initiating climate related investments: CEOs that made such investments cite regulatory complexity as the top factor (24 percent) inhibiting their companies’ ability to initiate those investments, as opposed to lower returns on investment (18 percent) or lack of buy-in from management or the board (6 percent).