Will 2023 Be A Good Year For The Global Economy? Investors And CEOs Disagree On Outlook

A new survey is showing that CEOs and investors have widely divergent views on the future of the global economy.

While 73% of leading CEOs are expecting worsening macroeconomic conditions for the first half of 2023, 76% of investors are expecting those conditions to improve.

The numbers come from a survey performed by Teneo, a CEO advisory firm that interviewed 300 global CEOs and institutional investors representing approximately $3 trillion of company and portfolio value.

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The CEOs surveyed were the heads of companies with annual revenue of $1 billion or more. Meanwhile, the investors chosen for the survey were "a global sampling of professional investors in investment banking, institutional investing, venture investing, asset management, private equity and hedge funds."

Deglobalization, a term used to describe a process of diminishing integration and cooperation between economies across the world, is central to understanding the report’s discrepancies. The survey found that 86% of CEOs and 94% of investors agree that deglobalization is a reality for the global economy, and almost half believe that the process is already underway and will be significant.

Periods of deglobalization are marked by a regionalization or nationalization of global supply chains, increased measures of protectionism within countries, decreased global trade and a general move towards a less connected world with more localized solutions to economic problems.

Recent global events like the Covid-19 pandemic and the Russian war in Ukraine have shown how fragile global supply chains can be. These major world events rang an alarm of caution for companies depending on the free flow of goods and services across continents for their operational success.

CEOs from mid-sized companies aligned with investors in thinking that the macroeconomic outlook is more positive than negative.

The survey asked whether the global economy, access to capital, industry conditions and customer demand were likely to improve or worsen in the first half of 2023.  While mid-sized company CEOs and investors expect conditions to improve across the board, CEOs of large companies had the opposite view.

Deglobalization can be the key behind this split. While mid-sized companies and investors are more regionally-focused, large companies tend to have global operations, which experienced their biggest disruptions since 2020. Large companies are experiencing the disruptive effects of deglobalization on a daily basis, and that might be impacting their outlook.

A majority of investors said that adjusting supply chains and looking for new sources of funding are key elements to adapting to a new deglobalized status-quo.

The survey also found that 26% of CEOs said downsizing is a viable possibility and 32% are considering onshoring part of their workforce.

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Photo by Greg Rosenke on Unsplash.