Economic optimism soars, yet CEOs grapple with AI, climate uncertainties

In a surprising divergence of sentiment, economic optimism among global CEOs has more than doubled over the past year, reaching 38% according to PwC’s 27th Annual Global CEO Survey. However, this newfound confidence is tempered by a stark reality, with almost half of CEOs expressing doubts about the viability of their businesses in a decade. This apparent contradiction arises as tech and climate pressures intensify, reshaping the landscape of global business.

The survey, conducted across 105 countries and territories and encompassing 4,702 CEOs, reveals a significant shift in perceptions. CEOs are increasingly bullish about global growth prospects, with 38% expressing optimism, up from a mere 18% in 2023. Simultaneously, concerns about inflation and macroeconomic volatility have receded, contributing to a more positive outlook.

Notably, 39% of CEOs anticipate a significant increase in their company’s headcount by 5% or more in 2024, signaling a hopeful trajectory for employment worldwide.

Despite the positive trends, confidence remains fragile. A striking 45% of CEOs now question the viability of their businesses in a decade without radical reinvention – a notable increase from 2023’s figure of 39%. This heightened sense of urgency is fueled by anticipated challenges from technology, climate change, and other mega-trends over the next three years.

“As business leaders are becoming less concerned about macroeconomic challenges, they are becoming more focused on disruptive forces within their industries,” noted Bob Moritz, Global Chair at PwC. “Whether it is accelerating the roll-out of generative AI or building their business to address the challenges and opportunities of the climate transition, this is a year of transformation.”

The AI opportunity and climate priorities

Generative AI emerges as a pivotal force for reinvention, with 70% of CEOs anticipating significant changes in how their companies create, deliver, and capture value over the next three years. The short-term impact is also positive, as CEOs expect improvements in product/service quality (58%) and enhanced stakeholder trust-building capabilities (48%).

However, CEOs acknowledge challenges associated with AI implementation, including the need for workforce up-skilling (69%) and concerns about cybersecurity risks (64%), misinformation (52%), legal liabilities, and biases (46%).

CEOs are increasingly recognizing the climate transition as a disruptive force with both risks and opportunities. Nearly one-third expect climate change to reshape value creation over the next three years, up from less than one-quarter over the past five years.

Progress is evident in actions taken to improve energy efficiency (76%) and innovate climate-friendly products (58%). However, incorporating climate risk into financial planning (45%) and addressing adaptation to physical climate risks (47%) lag behind.

Long-term concerns

As CEOs grapple with global mega-trends, concern for long-term business viability grows. The survey reveals that 45% of CEOs fear their businesses will not be viable in a decade without fundamental reinvention – a significant increase from 2023. Smaller companies appear to be at greater risk, with 56% of CEOs leading businesses generating less than US$100 million expressing concern about viability.

While CEOs acknowledge the necessity of change, challenges include regulatory hurdles (64%), competing operational concerns (55%), and a lack of necessary skills within their workforce (52%). The survey also highlights significant inefficiencies in routine activities, potentially costing companies a self-imposed US$10 trillion tax on productivity.

Doron Sadan, Managing Partner at PwC Israel, emphasized that the global trend toward economic optimism has not yet manifested in Israel. “Global trends do affect the Israeli economy, but in this period of war, accompanied by political challenges and economic instability, it is difficult to determine the recovery process,” he said.

“Despite this, I would like to emphasize civil society’s resilience, strength, and unprecedented mobilization. Also, experience suggests that post-war periods are characterized by economic growth due mainly to government priorities, such as adequate investment in infrastructure and projects alike. If the government makes investments geared towards long-term growth, we can expect to see the beginning of a long-term recovery,” he said, before calling for an end to the ongoing hostage crisis in Gaza: “I would like to use this platform to say, Bring Them Home!”