The mood in the economy has deteriorated rapidly. Three out of four business leaders are currently anticipating a decline in global economic growth. A year ago, only 15 percent were so pessimistic about the future. This is the result of a worldwide survey of around 4,500 CEOs from 71 countries, which the international consulting and auditing company PWC traditionally conducts at the beginning of each year and which was presented at the World Economic Forum in Davos.
Accordingly, only 18 percent of those surveyed believe that the global economy will grow this year. Last year it was 77 percent. In Germany, the CEOs are even more pessimistic: 82 percent of them expect growth to decline in the coming year, four times as much as in the previous year. The outbreak of the Ukraine war in February is likely to be the reason for the rapid change in mood. Add to that the global pandemic and the energy crisis that resulted from the war.
The mood is possibly worse than the actual situation. In Germany, for example, it has just been reported that the economy will have grown by as much as 1.9 percent in 2022. The prospects for 2023 are not as bad as they were recently. The German economy could thus avoid a recession. But pessimism is widespread right now: According to the latest global risk report by the World Economic Forum, just 20 percent of those surveyed from politics, business, science and civil society expect the political and economic situation to improve or at least stabilize within the next ten years. More than half, on the other hand, expect crises, shocks and high volatility.
On the other hand, other countries see Germany as the third most important growth market
“Climate change, war in Europe, energy crisis, inflation: we are all facing structural and systemic problems,” says Petra Justenhoven, spokeswoman for the management of PWC Germany. But the state of crisis and optimism should not be mutually exclusive. It takes confidence and courage to successfully implement the necessary transformation projects, such as digitization and decarbonization. But this is obviously missing.
Almost 40 percent of German CEOs stated that inflation is a very serious threat to their company. There are also geopolitical conflicts and macroeconomic volatility, cyber risks and climate change. This has consequences: The vast majority of CEOs in Germany say that they will reduce operating costs or have already done so due to the current market situation – or that they will raise prices or have already done so. Alternative suppliers are also being sought. Particularly alarming: one in four respondents does not believe that their own company will still be economically viable in ten years if the current course is maintained.
Germany is still highly relevant as a business location. According to the PWC survey, foreign countries see Germany as the third most important growth market, after the USA and China. 18 percent of the CEOs of foreign companies believe that Germany is important for their company growth in the next twelve months.