The vast majority (73%) of company executives expect a slowdown in the global economy in 2023, according to the 26th edition of PwC’s CEO survey. The response reflects the most pessimistic outlook in the 12 years since the question was included in the survey. Moreover, perceptions have changed against 2021 and 2022, when 76% and 77% of respondents, respectively, expect the economy’s growth rate to improve.

“The past few years have put the whole society to the test of endurance: pandemic, war, energy crisis, record inflation, rising interest rates, so the pessimism expressed in the current survey is not surprising. However, Romanian company executives are more confident about the development of the national economy than the global economy, given that 62% of them estimate a slowdown at the local level compared to 75% who expect a decline at the global level. Although the perception of the macroeconomic situation has worsened, our country’s leaders are more optimistic about the companies they lead, more than half expect business growth in the next year, that is, they built their strategies taking into account a potential economic downturn. – said Dinu Bumbeca, managing partner of PwC in Romania.

The economic growth of Romania in 2023 is estimated by the World Bank at 2.6%, by the International Monetary Fund (IMF) at 3.1%, and by the European Commission at 1.8%, which predicts slower growth for the entire EU (by 0.3%) . ) or for the states of the region: Bulgaria (1.1%), Hungary (0.1%) and Poland (0.7%).

Advanced economies such as France, Germany and the United Kingdom have more pessimistic expectations about domestic growth prospects than the global economy, compared with the United States, Brazil, India and China, according to the survey.

40% of executives believe that their organizations will not be economically viable in 10 years if current conditions persist.

This trend was particularly noted by respondents in the telecommunications (46%), manufacturing (43%), healthcare (42%) and technology (41%) sectors.

In comparison, 27% of CEOs in Romania have this opinion about the companies they manage, although they foresee numerous challenges in the next 10 years for the profitability of the industries they belong to.

Regarding business growth prospects over the next year, the percentage of CEOs who are very confident about business growth worldwide fell to 42%, the biggest drop since the 2008-2009 financial crisis.

Three main problems: inflation, macroeconomic volatility and geopolitical conflicts

While cyber risks and health risks were the biggest concerns a year ago, in 2023 the biggest concerns are the impact of inflation (40%) and macroeconomic volatility (31%) both in the short term and in the next five years.

For their part, Romanian managers consider inflation to be the main risk for business development (48%), followed by geopolitical conflicts (42%) and macroeconomic instability (38%).

CEOs cut costs but avoid layoffs or pay cuts

In response to the coming economic challenges, executives say they are taking steps to boost revenue and cut costs. Interestingly, while 52% of respondents have started to cut costs, only 19% have frozen hiring and 16% have cut staff, while 60% have no plans to cut staff in the next 12 months. This approach is in stark contrast to that of the 2008 financial crisis, when roughly twice as many short-term layoffs were expected. At the same time, 80% do not intend to reduce salaries in order to retain talent and reduce departures. Survey data suggests that CEOs are avoiding layoffs also thanks to the recent experience of the “big resignation” phenomenon.

The CEO 2023 survey examines the opinions of more than 4,400 CEOs from around the world, including Romania. The full CEO Survey 2023 report for Romania will be published in March.

Article supported by PwC Romania