Overview of Conditions
Updated 26 July 2024: In today’s global landscape, CEOs maintain cautious optimism amid different economic contexts in markets and ongoing geopolitical tensions.
The US shows resilient growth but faces inflation challenges, while the ECB’s June interest rate cuts aim to foster Europe’s modest recovery.
China grapples with economic slowdown and structural issues. Financial markets in the West hit record highs, contrasting with China’s downturn.
Adaptive strategies and vigilant management are essential as global uncertainties persist.
See below 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 have slightly revised their global economic outlooks upwards in recent months, albeit with varying degrees of optimism. The World Bank remains the least optimistic due to more pessimistic predictions about the pace of inflation reduction and monetary policies. However, the overall economic outlook remains subdued. According to the World Bank, in 2024-25, growth is expected to underperform its 2010s average in nearly 60 percent of economies, which represent more than 80 percent of global output and population.
This trend is particularly evident in China, which is currently growing at half the pace it did during the 2000s. The UK and the Eurozone continue to have the slowest growth projections across all reports, while the US is depicted as having robust economic resilience, driven mainly by strong domestic demand and a resilient job market. If these trends continue, the gap between European and US economies will likely continue to widen.
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 those of the European Union. This context reflects the strong economic resilience of the United States and the significant challenges Europe faces. These challenges include slower economic recovery, regulatory and policy complexity, and sector-specific issues that have led to decreased FDI inflows and outflows at a greater pace than in other regions.
Increased scrutiny under the EU Foreign Direct Investment Screening Regulation and heightened geopolitical tensions have further contributed to this decline. Meanwhile, China continues to be a major global investor, but its inward FDI has been affected by ongoing regulatory tightening, geopolitical tensions, and economic slowdown, dampening 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:
Despite the cautious approach towards interest rates recommended by international economic institutions, the Bank of Canada and the ECB have shown optimism by lowering their rates while maintaining a restrictive monetary policy in real terms. The cut aims to bolster business confidence and investment, potentially leading to a more robust economic recovery. Meanwhile, the BoE, the Fed, and the People’s Bank of China (PBOC) have opted to hold previous interest rates, although changes are expected in the following months.
The inflation rate continues to exceed the optimal 2% target favoured by central banks, although the markets show a positive trend towards combating inflationary pressures in Western economies and deflationary pressures in China. Notably, while goods price inflation has normalized, services inflation remains high, reflecting ongoing sector-specific pressures. Furthermore, the EU inflation experienced a slight hike of 10 basis points in the last quarter.
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 July 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 continue reaching all-time highs despite recent and upcoming elections, which normally cause market volatility. The resilience of Western financial markets can be attributed to strong economic fundamentals and investor confidence, even in the face of political and geopolitical uncertainties.
This contrasts sharply with the Chinese stock market, which continues in a downward trend. 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. The Chinese government has started implementing a stimulus package announced in March. However, the market's response has been mixed. Fundamental challenges in the sector persist despite some moderate improvement in property developer stock prices.
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, improving 2023 looming results but far below the average growth rates observed in the two preceding decades. Forecasts also vary per 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.