Global CEOs rank China as No 1 for future growth
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Business leaders considered China as the most important country for future economic growth, a survey showed on Tuesday.
In a worldwide poll of 1,201 CEOs, China was named by 39 percent of them as the No 1 growth engine, followed by the 21 percent for the United States, 19 percent for Brazil and 18 percent for India, according to PwC's 14th Annual Global CEO Survey, which was released here on the eve of the annual meeting of the World Economic Forum.
Global CEOs also saw China, the US and India as the most important future sources for products and raw materials.
Regionally, 90 percent of CEOs said they expect their operations to grow in Asia in the next 12 months, followed by Latin America's 84 percent, Africa's 75 percent, the Middle East's 72 percent and Eastern Europe's 70 percent.
But only a third of respondents said the country in which they were based offered high growth potential.
The survey, which was conducted in 69 countries during the last quarter of 2010, also showed CEOs' confidence in future growth. Forty-eight percent of the CEOs said they were "very confident" of growth in the next 12 months, representing a major increase from 31 percent last year and 50 percent in 2008 who were "very confident".
In total, 88 percent of CEOs said they now had some levels of confidence for prospects in the next 12 months, up from 81 percent last year. In the long term, 94 percent are confident of growth of three years from now, an increase of two percentage points.
Renewed confidence was spread across all continents, with CEOs in India, Austria, Colombia, Peru, China, Thailand and Paraguay particularly upbeat about near term growth.
Regionally, CEOs in Western Europe were the least confident, largely due to the ongoing sovereign debt crisis. German CEOs were an exception, with nearly 80 percent of them "very confident," up from about 20 percent last year.
The positive momentum in CEO confidence was reflected in hiring plans. More than half of CEOs worldwide said they expected to add jobs in the next 12 months, up from 39 percent in the last survey. CEOs in Central Europe, Asia Pacific and Africa were particularly bullish about hiring. Significantly, only 16 percent of CEOs said they expected to cut their workforce in the coming year, down from 25 percent last year.
"CEOs have emerged from the bunker mentality of surviving the recession. They now see renewed opportunity for growth, even in the near term, and are determined to take advantage of better global economic conditions and increased customer demands," said Dennis Nally, chairman of PricewaterhouseCoopers International.
PwC's report said the high levels of confidence in light of continued uncertainty in several major economies were surprising. Despite the confidence, CEOs do have certain concerns.
Nearly three-fourths of CEOs cited uncertain or volatile economic growth as a potential threat to their business, up from 66 percent last year. And nearly a third of CEOs said they were "extremely concerned" about economic prospects.
Other commonly mentioned threats included government response to fiscal deficits, over-regulation, exchange rate volatility, unstable capital markets and protectionism. The specter of inflation, which is a major risk to watch in the developing world, was cited by less than a third of respondents.
The divergence within the global economy also posed challenges for CEOs in deciding their company strategy.
Although the International Monetary Fund (IMF) forecasted global growth at 4.2 percent for 2011, developed countries, which make up 52 percent of the world economy, are growing at only half that pace. In contrast, emerging markets are booming, with Indonesia, India and China all forecast to grow faster than 6 percent.
"The post-recession global economy is recovering on two-tiers. Emerging economies like China, India and Brazil are growing at rates that far surpass the developed nations. The shift in the economic balance of power creates challenges for CEOs in deciding how and where to invest in facilities, people and innovation," Nally said.
"Companies that understand and capitalize on the diverging growth patterns of the developed and emerging economies will be the winners in the years ahead," he added.
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