Overview of Conditions
Updated 14 May 2024: In today's complex global landscape CEOs maintain a cautious optimism,
navigating through economic disparities across key regions while focusing on major concerns like geopolitical tensions, AI integration within organizations, and uncertain future interest rates.
The US exhibits strong growth despite struggles with inflation. Europe, facing persistent economic challenges, adopts a more optimistic monetary policy stance. The UK’s outlook is mixed with Brexit impacting trade barriers and business investments, but progressive decline in inflation and interest rates could stabilize economic conditions. China, meanwhile, grapples with an economic slowdown. Financial markets have soared to record highs in the West, starkly contrasting with China’s downturn. Consequently, the adoption of adaptive strategies and vigilant management is essential as geopolitical tensions and economic uncertainties persistently influence the global economic outlook.
Scroll down for more detail on current global business conditions.
CEO Sentiment & Outlook
In this section, we analyse CEO sentiment and outlook by aggregating multiple globally-renowned sources including from KPMG, EY and PwC and Deloitte & Fortune.
The bottom line:
The CEOs surveyed express moderated optimism in a complex outlook shaped by rapid technological advancements, geopolitical tensions, and interest rates uncertainty. A common emphasis across the surveys is on the integration and ethical implementation of generative AI as a major strategic focus, reflecting a drive towards innovation to secure competitive advantage. Nevertheless, the degree of urgency and the approach to integrating AI varies across sources, as well as overall optimism towards the real capacity of AI to deliver actual revenue growth besides efficiency and processes optimization.
Additionally, there is a notable shift towards sustainability and ESG (Environmental, Social, Governance) considerations, not merely as compliance but as core elements of business strategy aimed at long-term resilience and growth. Despite challenges like rising interest rates and geopolitical instability, CEOs show a commitment to adapt to the challenging environment by leveraging technology and sustainable practices.
Overall Sentiment
KPMG
73%
global CEOs are confident about the economy over the next three years, compared to 71% in 2022.
EY
64%
expect an increase in revenue growth.
PwC
Slight optimism surge but less confidence that their own companies will grow revenue.
Deloitte & Fortune
27%
are optimistic about the global economy, compared to just 7% in Fall 2023.
Key highlight
KPMG
77%
say that tightening monetary policies could prolong any potential or current recessions, while over the next three years, 77 percent believe cost-of-living pressures will negatively impact their organization’s prosperity.
EY
95%
of CEOs are planning to maintain or accelerate their transformational change in 2024.
PwC
45%
of CEOs believe their company will not be viable in ten years if it stays on its current path.
Deloitte & Fortune
almost 50%
of CEOs believe the US Federal Reserve will cut interest rates by the end of the third quarter, but 1 in 10 doubt they'll be reduced in 2024.
Sustainability
KPMG
69%
of global CEOs have fully embedded ESG into their business as a means to create value. Growing relevance for customer relationships but afraid that progress is not enough for stakeholders.
PwC
65%
of CEOs report progress in decarbonization, being energy efficiency improvements the most popular action among CEOs.
KPMG
Generative AI is among their top investment priorities, but CEOs are concerned with an ethical implementation of AI.
EY
76%
of CEOs agree that AI will deliver efficiency benefits but have little impact on revenue growth. However there is a clear desire to exploit the potential of technology and AI to improve efficiencies and boost financial performance.
PwC
60%
of CEOs expect it to improve product or service quality, but 70% report to increase competition, drive changes in business models or require new skills in workforce.
Deloitte & Fortune
Adoption rates continue to increase as CEOs look beyond efficiencies and automation to Generative AI capabilities to find new insights, reduce operational costs, and speed up innovation.
Top Concern
KPMG
Geopolitics
and political uncertainty vs. emerging and disruptive technology in 2022.
EY
78%
of CEOs are worried about the potential rise of populist movements to increase geopolitical uncertainty.
PwC
Inflation (24%), macroeconomic volatility (24%), cyber risks (21%) and geopolitical conflict (18%) are the top concerns for CEOs.
Deloitte & Fortune
65%
put geopolitical instability as the top external business disruptor.
Source: Original Ibec Global based on the results of KPMG 2023 CEO Outlook; EY 2024 CEO Outlook Pulse; PwC 27th Annual Global CEO Survey; Fortune/Deloitte Winter 2024 CEO Survey Insights.
Economic Conditions
In this section, we examine GDP growth forecasts for the EU, UK, US and China using data from the OECD, IMF, World Bank and FDI flows using data from OECD and UNCTAD.
GDP Growth
Source: Original Ibec Global chart based on the data from: International Monetary Fund. (April 2024). World Economic Outlook— Steady but Slow: Resilience amid Divergence. Washington, DC; OECD (2024), OECD Economic Outlook, Interim Report February 2024: Strengthening the Foundations for Growth, OECD Publishing, Paris; World Bank. 2024. Global Economic Prospects, January 2024. Washington, DC
The bottom line:
All sources evidence the relative economic fragility of the Eurozone, with moderately weak growth compared to other major economies such as the US, which is depicted as having robust economic resilience derived mainly from strong domestic demand and a resilient job market. Similarly to the Eurozone, the UK’s outlook is mixed with Brexit impacting trade barriers and business investments, but progressive decline in inflation and interest rates could stabilize economic conditions. Finally, China’s growth is projected to slow down in the coming years. Dimmer prospects - noted across sources – relate to efforts to boost domestic consumption and challenges in the real estate sector.
Probably one of the main discrepancies across the reports lies on the impact evaluation of geopolitical tensions. Although the IMF notes global resilience despite growing tensions, both the World Bank and the OECD emphasize the potential impact of geopolitics in economic stability, especially in the Eurozone and China.
FDI flows
The bottom line:
The US remains the leading destination and source of FDI globally, with both its inward and outward flows remaining much more stable than in the European Union. This context reflects both the strong economic resilience of the United States and the salient challenges Europe faces, including slower economic recovery, policy and regulatory complexity, and market conditions.
While China continues to be a major global investor, its inward FDI has been affected by ongoing regulatory tightening, geopolitical tensions and economic slowdown, which have somewhat dampened its attractiveness to foreign investors.
Source: Original Ibec Global chart based on OECD data
Source: Original Ibec Global chart based on OECD data
Source: Original Ibec Global chart based on UNCTAD data.
Source: Original Ibec Global chart based on UNCTAD data.
Financial Conditions
In this section, we examine interest rates, inflation, and stock market performance in the Eurozone, UK, US and China using data from the European Central Bank, Federal Reserve, Bank of England and the Peoples Bank of China; and stock market performance using data from The Euro Stoxx 50, S & P 500, FTSE 100, and CSI 300.
Interest Rates & Inflation
The bottom line:
The graph below (right) shows that despite overall downward trends in inflation across Western economies, the inflation rate still exceeds the optimal 2% target favoured by central banks. Moreover, US inflation suffered from a slight hike of 10 basis points at the beginning of 2024, with stubbornly high housing and transportation costs. Despite moderate initial optimism which can also be sensed in the different CEO surveys analyzed above, consumer prices remain largely influenced by energy costs, supply disruptions and recovery speeds.
For this reason, the economic outlooks by the IMF, OECD and the World Bank suggest a cautious approach towards interest rates. Conversely, in China, the economy has been grappling with deflation for the past year due to a downturn in the property market, a significant drop in stock market values, and lack of consumer confidence. The People's Bank of China (PBOC) has cut interest rates several times in hopes of boosting bank lending and bringing inflation back to its target of 3%.
Source: Original Ibec Global chart based on the latest monetary policy reports by the European Central Bank, Bank of England, the Federal Reserve, and the People’s Bank of China.
Interest Rates (as of May 2024)
Source: Ibec Global original chart based on the Consumer Price Index Summary of the US Bureau of Labor Statistics; Eurostat; UK’s Office for National Statistics; China National Bureau of Statistics, Consumer Price Index.
Financial Markets
The bottom line:
Financial markets in the UK, US, and Europe are reaching all-time highs, contrasting sharply with the Chinese stock market, which has plummeted. Since reaching its peak in 2021, the Chinese stock market has shed approximately 40% of its value, driven by a multifaceted crisis that has stifled investment and growth.
In response, the Chinese government is contemplating a substantial €260 billion stimulus package to stabilize the market. Meanwhile, Western stock markets demonstrate robust resilience, weathering geopolitical tensions in the Middle East and Ukraine effectively.
Source: Ibec Global original chart based on the stock prices of Euro Stoxx 50, FTSE 100, S&P 500 and CSI 300.
Labour Market
In this section, we examine unemployment rates in the Eurozone, UK, US and China using data from the US Bureau of Labour Statistics, Eurostat, UK's Office for National Statistics and the National Bureau of Statistics in China.
Unemployment
Source: Ibec Global original chart based on the data from the US Bureau of Labor Statistics; Eurostat; UK’s Office for National Statistics; National Bureau of Statistics of China.
The bottom line:
The rapid mitigation of COVID-19's impact on unemployment rates, particularly in the US, underscores the significant influence of fiscal and monetary policies on the economy. Aggressive stimulus measures in the US, Eurozone, and UK have effectively reduced unemployment but also contributed to current inflationary pressures.
These regions are now grappling with the economic challenges of higher interest rates. Paradoxically, progressive reduction of inflation has not produced a significant spike in unemployment, in what has been termed as “immaculate disinflation”. In contrast, official statistics from China indicate a stable unemployment rate around 5% in recent years, despite the economic slowdown, suggesting a lesser impact of COVID-19 on its labor market.
Trade
In this section, we examine the value of exports using data from the World Trade Organisation.
Exports
The bottom line:
The WTO forecasts a rebound in global merchandise trade for 2024 and 2025, though recovery will vary by region. Asia is expected to demonstrate greater resilience, contrasting with subdued import demand in Europe and North America. Geopolitical tensions and persistent inflation will critically shape trade dynamics, impacting these regions as they manage supply chain disruptions and price volatility.
The interplay between the US and China will continue to drive global trade patterns, particularly in the technology and manufacturing sectors. Similarly, the relationship between the European Union and the UK remains a crucial area of focus, influencing broader trade strategies.
Source: Ibec Global original chart based on the data from the April 2024 WTO Global Trade Outlook and Statistics.
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