CEOs confident about future economic climate

Australian business leaders and global CEOs are feeling positive towards the economic climate with many expecting to experience exponential growth over the next 12 months.

PwC released its 28th Annual Global CEO Survey which found 47 per cent of Australian business leaders expected global growth over the next year, up from 37 per cent last year.

The report surveyed 4,701 CEOs across 109 countries and territories, 116 of those being from Australia.

The results reflected that 41 per cent of local CEOs included in the research also expected to increase headcount over the next 12 months, while 22 per cent expected headcount to decrease.

Despite the survey highlighting positive global economic sentiment, PwC said inflation would remain a key threat as 28 per cent of Australian leaders said they felt ‘extremely exposed’ to inflation.

Results also demonstrated that while Australian CEOs had a higher degree of economic confidence, they were falling behind global peers when it came to realising the benefits of converging megatrends such as technological disruption and climate change.

PwC Australia CEO Kevin Burrowes said it was imperative for Australian leaders to understand reinvention was no longer a choice.

“In Australia, the survey suggests some CEOs are taking bold steps to reinvent their business models, but many are yet to get started. While responding to these trends can be challenging, it’s important to take the leap now so businesses don’t miss the opportunity altogether,” he said.

“Businesses in Australia are well and truly feeling the impacts of global disruptive forces. Disrupters such as AI and climate change have fundamentally changed the way we work, and those who responded early are starting to reap the awards.”

Australian CEOs were less concerned about the long-term viability of their business, with 74 per cent of local leaders confident their business would survive the next decade, compared to 55 per cent globally.

Only 38 per cent of global companies have reinvented their business models and begun competing in at least one sector over the last five years, the survey revealed.

Burrowes said this pace of reinvention was slow and showed that a large majority of companies lacked agility.

“When it comes to moving budget and people between projects and business units, around half of CEOs globally told us they reallocate 10 per cent or less of financial and human resources from year to year.”

Not surprisingly, AI was reflected as an important factor for business leaders, as 88 per cent said the adoption of AI would help achieve their company’s business strategy over the next three years.

CEOs around the world reported seeing efficiency gains in their employees’ time over the last 12 months, with one-third having reported an increase in revenue and profitability due to AI adoption.

These results were less significant across Australia’s business leaders as only 14 per cent reported AI had increased their business profitability and only 10 per cent reported an increase in revenue.

Another area that Australian business leaders had fallen behind in compared to global leaders was potential gains from investment in climate sustainability.

The survey found nearly two-thirds of global CEOs that reported climate related investments had either reduced costs or had no significant impact on costs.

However, in Australia 17 percent reported increased revenue as a result of climate friendly investments which indicated Australia was lagging behind the global benchmark.

Burrowes said the report outlined ways in which leaders could cultivate value in the current era of rapid change through quality decision making, re-thinking value creation and re-allocating resources.

“At the heart of this is the need to focus more on the quality and process of decision making, rather than fixating on the outcome,” Burrowes said.

“As CEOs consider success in 2025, taking bold steps to address and embrace technological disruption and climate change have proven to drive results around the world. What’s clear is that reinvention is no longer an option – it’s time to self-disrupt, or risk being disrupted.”