Chief executives around the world are increasingly worried about the prospects of a recession and high inflation, according to a new survey conducted ahead of the World Economic Forum annual meeting in Davos. The survey, released Monday by accounting firm PwC, found that top business leaders have a gloomy outlook on the global economy in 2024 amid various threats.
Recession Fears at Multi-Year High
Nearly 80% of CEOs surveyed predict a recession in 2024, the highest level since PwC began asking about recession risk in 2012. 
With many countries facing high inflation and central banks aggressively hiking interest rates to cool demand, CEOs see a significant risk of recession as policy tightens. The rising cost of living is also eroding consumer purchasing power.
The increased recession worries come even as CEOs have relatively upbeat expectations for their own companies’ prospects. The disconnect highlights business leaders’ lack of confidence in the macroeconomic environment even if their firm is well-positioned.
Inflation Now a Top Threat for Business
Soaring inflation has rapidly climbed the list of CEOs’ concerns. Nearly 70% of CEOs surveyed called inflation one of their firms’ top external threats in 2024, up from just 31% last year.
The inflation threat now ranks above other longstanding issues like over-regulation, policy uncertainty, and supply chain disruption. It reflects how price stability has deteriorated across both advanced and emerging economies.
Many CEOs don’t believe central banks will be able to tame inflation without inflicting significant pain. Over 40% predict interest rates will need to rise above 4% in major economies to control inflation, setting the stage for a tougher period of adjustment.
AI and Climate Also Rising Risks
While recession and inflation risks are most immediate, CEOs are also increasingly worried about long-term threats from artificial intelligence and climate change.
Nearly 50% of CEOs surveyed do not believe their business models will remain economically viable through 2032 amid accelerating technology changes and sustainability pressures. It underlines a sense that AI and net zero commitments will force companies to transform themselves at a quicker pace.
| Biggest Long-Term Threats to Business Viability | 2022 | 2023 |
|---|---|---|
| Changes in industry technology | 34% | 44% |
| Supply chain disruption | 33% | 37% |
| Failure to act on climate change | 31% | 41% |
| Lack of access to skills/capabilities | 30% | 36% |
Many CEOs see their current strategies falling behind the curve on leveraging AI and managing climate risk over the next decade. Pressure from investors, policymakers and the public on these issues is set to rise.
Geopolitics Also Causing Uncertainty
Simmering geopolitical tensions create another downside risk emphasized by CEOs. Over a third rank geopolitical conflict as a top threat to firm growth prospects over the next three years – the highest level since PwC added the risk to its CEO survey.
Russia’s invasion of Ukraine and increased friction between the West and China are causes of the geopolitical anxiety. Almost 60% of CEOs worry protectionist policies will grow over the next three years, threatening global supply chains and growth.
Confidence in Own Firm Still Fairly High
Despite the gloomy economic outlook and rising long-term threats, CEOs enter 2024 with a reasonable level of confidence in their own company’s financial prospects.
Over 40% of CEOs project revenue growth for their firm of over 5% in 2024. Expectations for hiring, capital investment and M&A activity are also solid. It indicates businesses have been able to pass on higher costs so far and operate through supply constraints.
The relatively upbeat view on individual firms contrasts the wider pessimism on global growth (see chart). But some CEOs caution it is still early days in terms of understanding recession risks. An economic downturn could quickly alter the picture.
Policymakers Largely Seen as Lagging
Many CEOs don’t think policymakers are keeping up with emerging AI and climate threats to business models. Only about a third believe government policies, regulations and incentives will help their transition efforts over the next ten years.
Without more policy support, achieving net zero and responsible AI adoption targets will be very difficult across industries. CEOs want clearer guidance on metrics, standards and pathways for technology transformation and carbon reduction.
There is also skepticism on whether recession risks are being properly addressed. Just 27% of CEOs think policymakers get the balance right between economic growth and reducing inflation.
Cost Control Now a Priority
To gird for potential recession or stagflation, CEOs plan to focus heavily on cost management strategies in 2024. Reducing operating costs and increasing workforce productivity are top priorities for about half of CEOs globally.
Many CEOs also aim to rethink supply chains in 2024 by onshoring more production and increasing inventory levels. It comes after two years of severe supply disruption but at the expense of higher costs.
Changes Coming Across Industries
While outlooks vary across sectors, nearly every industry will need to adapt to emerging AI and climate challenges based on the CEO survey results.
Manufacturing & Construction CEOs stand out with their economic pessimism – 90% predict a recession in 2024 as activity slows. Many also report being behind the curve on carbon reduction and technology adoption goals over the next decade.
Technology, Media & Telecoms CEOs are most worried about potential regulation of AI and data governance despite leading on AI integration. Over half fear another tech company could disrupt their business.
Healthcare CEOs have among the bleakest views on policy support for technology transformation and carbon reduction. But they are ramping up AI tools rapidly as pandemic backlogs persist.
Financial Services CEOs are most concerned by cyber threats and AI ethics considerations. Over 40% feel current AI governance and control processes are very ineffective.
Retail CEOs are struggling the most from inflation pressures but feel they have made good progress adapting business models for e-commerce and omnichannel demands.
Conclusion: Much Work Ahead to Shape Sustainable Future
As economic storm clouds gather, CEOs across the globe have their hands full both managing short-term recession risks and investing in long-term transformation. It will require rapidly advancing sustainability commitments and AI capabilities while avoiding demand destruction.
With confidence in policy support lacking, pressure is on corporate leaders to drive changes themselves. Their ability to simultaneously navigate recession risks, extreme inflation, geopolitical tensions, AI disruption and climate consequences will define the business landscape for the next decade.
There are reasonable doubts over whether current business models can endure so many threats without dramatic reinvention. But the private sector has shown great capacity for innovation and adaptation during past crises.
The coming years will test that capacity like never before. CEOs understand the stakes in reshaping global industry for a more sustainable future – now bold strategies must follow.
To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.
