What’s on the mind of CEOs in Romania and Central and Eastern Europe?
PwC's 22nd CEO Survey
Uncertainty around public policy, trade conflicts and protectionism have replaced, in the top ten threats to the organisations’ growth, terrorism, climate change and the increasing tax burden, in the eyes of the CEOs worldwide who are extremely concerned with these aspects. However, over-regulation, availability of key skills, cyber threats and geopolitical uncertainty remain, just like in recent years, at the top end of the concern list. As with our previous surveys, over-regulation ranks first in the top threats.
Just like a year ago, 51% of the CEOs in Central and Eastern Europe say they are extremely concerned about the availability of key skills. Their counterparts in Romania share their opinion, almost to the same extent. Populist governmental policies promoted by political regimes in several Central and Eastern Europe countries are gaining momentum and becoming an immediate concern for CEOs. Governments are very active in pulling the available economic levers, causing business executives to be more cautious and focus more on what is under their control. Uncertainty around public policy is among the top three threats CEOs are extremely concerned about, not only in Central and Eastern Europe, but also in the majority of the regions across the world.
CEOs in Romania are more concerned this year than their counterparts worldwide and in the region about the large number of potential threats to growth prospects. Inadequate infrastructure is the number one concern, as in 2018, with almost two-thirds (62%) of executives in Romania saying they are extremely concerned. The same percentage appears this year when it comes to uncertainty about public policy. The next two challenges, in the opinion of around half of the respondents in Romania, have to do with the workforce – the availability of people with key skills (50%) and the change in the workforce demographics (47%). Business executives in Romania are focusing their attention on ways for their companies to adjust to rising populism, which ranks last in the top five potential threats.
Message from Ionuț Simion, Country Managing Partner
Our preceding survey had shown a record surge in the optimism levels of CEOs in Central and Eastern Europe in terms of global economy growth prospects. This year, on the contrary, a record slump in their pessimism level is apparent, with the prevailing feeling being caution against the backdrop of growing uncertainty. This year also shows a drop in the confidence of the CEOs in the region in their organisations’ prospects for revenue growth in the short- (12 months) and medium-term (three years). Although there are still more CEOs who expect global growth to improve, 2019’s slowdown signs should not be underestimated. The growing pessimism of CEOs in our region is not surprising. Some economists project a growth-rate slowdown and have adjusted downwards their 2019 forecasts. Tension in international trade, unpredictable geopolitical landscape and stricter monetary and fiscal policies cause a cautious view of the economic growth prospects. Nationalist sentiments are a growing trend not only in Central and Eastern Europe, but across the world, while populist politics have a larger influence over economic policies.
This year, the threats CEOs in the region see as pressing mainly have to do with the ease of doing business in the markets where they operate – over-regulation, public policy uncertainty, availability of key skills, exchange rate volatility or increasing tax burden. In this context, business executives focus more inside their own organisations for growth opportunities. When asked to name the most attractive foreign markets in terms of investments, CEOs narrow down their options and express ever-greater uncertainty, as revenue growth and business expansion opportunities are more associated with their domestic market.
While showing particular interest in what is within their control inside their own organisations, CEOs in our region are striving to narrow the digital skills gap. This is because, despite massive investments in the IT infrastructure, there is still a sizeable gap between the useful data CEOs need for decision-making and what they actually get. Businesses are trying to translate the plethora of available data into information that is relevant for a better and faster decision-making process, which relies not only on experiences and gut feeling, but also on receiving adequate, comprehensive data in real time. In their approach, organisations are faced with the lack of talent specialising in integrating and extracting value out of big data. Having employees with such analytical skills is an absolute must for businesses in order to implement Artificial Intelligence (AI) initiatives – a topic on the future impact of which there is wide consensus among the CEOs in Central and Eastern Europe. In other words, bridging the two gaps – information gap and analytical skills gap – is essential to enable exploration of the AI wealth of opportunities.