First, our CEOs are more pessimistic than most about the economy as a whole: we have the second-lowest percentage predicting an improvement in global growth, at 45%. Second, and perhaps more interestingly, they’re more bullish on their own companies’ relative performance: we have the narrowest gap between forecasts for the world and for CEOs’ own organisations.
As many as 40% of them are “very confident” about their prospects for revenue growth in the next 12 months. The difference of 5 percentage points contrasts with Western Europe and Latin America, where this metric – let’s call it the “optimism gap” – reaches as much as 20 percentage points. If the global CEO is an anxious optimist, then it seems CEE is the land of the clear-eyed realists.
So why are Central and Eastern European CEOs’ forecasts for their companies so close to their predictions for the global economy? First of all, from where they sit, a number of potential challenges to global growth loom large on the horizon. This year’s survey sees rising concern about external factors such as terrorism, climate change, cyber-attacks and populism.
While Russia and parts of Central Asia have long faced the threat of terrorism, that worry now seems to be permeating the entire region. Concern about the rest of this threat matrix has also jumped from a few years ago. And in addition to looking at outside factors, CEOs are also concerned about how to attract and retain qualified employees (which we discuss in the “Technology and talent” section).
General geopolitical concern also weighs on the minds of CEE executives, which is no surprise considering ongoing tension between Russia and the West, and between some Central European countries and their fellow EU members to the west.
CEE members of the EU also have reason to be anxious about how Brexit may disrupt labour markets and supply chains. And when we lengthen the time horizon to look at organisations’ growth prospects for the next three years, CEOs in the region are the most pessimistic of any of their global peers, with just 32% reporting that they’re “very confident”.
So why are they relatively bullish on their companies’ prospects for 2018? To answer that, take a look back at the past 25 years: CEOs in this region have managed to survive a complete economic and political transformation, along with war, hyperinflation, booms, busts and wrenching social change. They’re adept at managing in times of chaos, so it’s no surprise that they’re confident in their abilities to tackle the emerging matrix of threats.
What’s more, recent years have provided a few additional reasons for optimism at the level of individual companies. As global jitters faded in 2017, the region enjoyed a return to favour with investors. Commodity prices seem to have settled (for now) at a level that’s high enough to help deliver economic stabilisation in Russia and other producers, while not high enough to stoke inflation or choke off growth in the Central European countries that are net importers.
Better times in Western Europe are also trickling down to exporters in the CEE EU members. Poland in particular has found a growth model driven by consumer spending and EU-funded investment (though over the longer term, there may be questions about its sustainability). Individual companies are reaching digital maturity at a rate similar to the global average.
So Central and Eastern European CEOs look at the emerging list of global threats with confidence in their ability to cope with whatever the world throws at them. But what really concerns them is the challenge of attracting and retaining employees with the skills they need, and a new set of expectations for what they want from their employers.