The survey results were originally presented during the annual meeting of the World Economic Forum, held in Davos, Switzerland, on January 20, 2025. “This year’s CEO Survey findings highlight a stark juxtaposition – business leaders around the world are optimistic about the year ahead, but also know they must re-invent how they create, deliver and capture value,” said Mohamed Kande, global chairman of PwC. “Emerging technologies such as GenAI, shifts in geopolitics, and the climate transition are all revolutionising how the economy works,” Kande added.

The report, which surveyed 4,701 CEOs across 109 countries and territories, also found that 42 per cent expect to increase headcount by 5 per cent or more in the next 12 months. This is more than double the proportion who expect headcount decreases (17 per cent), and up from 39 per cent last year. The percentage is highest (48 per cent) among smaller companies (less than US$100 million) and those in the technology (61 per cent), real estate (61 per cent), private equity (52 per cent) and pharma and life sciences (51 per cent) sectors.  

Kande also explained that “new business ecosystems are forming, transforming how companies compete and create value”. “To thrive, business leaders must act now and take bold decisions around their strategy – ranging from people, footprint and supply chain, right through to reinventing their business model,” the PwC global chairman added. “While CEOs are optimistic about the global economy”, the report mentioned, “macroeconomic volatility (29 per cent) and inflation (27 per cent) nevertheless remain the top risks for the year ahead cited by CEOs globally, but with clear differences between regions”.

The report also showed that geopolitical conflict is seen as the biggest risk in the Middle East (41 per cent) and Central and Eastern Europe (34 per cent).

Meanwhile, in Western Europe, cyber risk (27 per cent) is a marginally higher concern than a lack of skilled workers (25 per cent) and inflation (24 per cent) – with macroeconomic volatility topping the list at 29 per cent.

Inflation is the top concern in Africa (39 per cent), while North America and Asia-Pacific prioritise risks largely in line with the global averages. 

As was the case during the last two years, four in ten (42 per cent) CEOs believe their company will not be viable beyond the next decade if it continues on its current path. “Among those that do not expect to last without significant change, 42 per cent cite shifts in the regulatory environment as having the biggest influence on their economic viability,” the report said. “But CEOs are taking action – across all sectors, almost two-thirds (63 per cent) have taken at least one significant action to change how their company creates, delivers, and captures value in the last five years, with CEOs that have taken more reinvention actions in the last five years reporting higher profit margins in the last 12 months,” it added.

The company also pointed out that “as companies look to reinvent their business models, almost four in ten (38 per cent) say they have begun competing in at least one new sector in the last five years – with about one-third (34 per cent) noting this has represented over 20 per cent of company revenue over this period”. “However, the pace of reinvention is slow and a large majority of companies lack agility,” it added.

The report further explained that “when it comes to moving budget and people between projects and business units, around half of CEOs told us that they reallocate 10 per cent or less of financial and human resources from year to year”. In addition, more than two-thirds reallocate less than 20 per cent. On average, only 7 per cent of revenue over the last five years has come from distinct new businesses.

Regarding the tangible impact from generative AI (GenAI), CEOs expressed optimism. More than half (56 per cent) report seeing efficiency gains in their employees’ time over the last 12 months, and one-third saw revenue (32 per cent) increases. “However”, the report said, “performance is somewhat below expectations expressed last year”. In 2024, 46 per cent said they expected to see profitability improvements. “A year later, when we asked if they had seen those gains, only 34 per cent said they had. Trust in AI remains a hurdle to more widespread adoption,” the company said. “Only a third of CEOs said they have a high degree of trust in embedding the technology into key processes in their company,” it added. “Despite this”, PwC continued, “optimism about GenAI’s impacts on profitability is slightly up on last year – with 49 per cent expecting an increase in the next 12 months”.

Roughly half (47 per cent) expect to integrate AI (including GenAI) into their technology platforms over the next three years, 41 per cent plan to integrate it into core business processes and 30 per cent have plans for new products and service development. “While it is early days, there is nothing in our data to suggest a widespread reduction in employment opportunities across the global economy as a result of GenAI. More CEOs say GenAI has increased headcount than decreased it (17 per cent v 13 per cent),” PwC stated.

As the shift towards addressing climate change continues to influence businesses, CEOs are actively responding. When questioned about the financial effects of climate-related investments over the past five years, it emerged that such initiatives were six times more likely to have boosted revenue (33 per cent) than to have reduced it (5 per cent). Moreover, nearly two-thirds of CEOs indicated that these investments had either lowered costs or had no notable impact on their expenses. “However, challenges remain around initiating climate related investments: CEOs that made such investments cite regulatory complexity as the top factor (24 per cent) inhibiting their companies’ ability to initiate those investments, as opposed to lower returns on investment (18 per cent) or lack of buy-in from management or the board (6 per cent),” the report stated.

In terms of the Cypriot market specifically, the company said that “as part of its global survey initiatives, PwC Cyprus is set to unveil the findings of its 14th local CEO survey during a special event scheduled for February 25, 2025”. “This year’s survey saw participation from 119 CEOs in Cyprus, indicating the business community’s interest in global and regional topics that affect their everyday and future status,” the company concluded.

Source: Cyprus Mail