CEO Confidence Rebounds With Global Economy, Davos Survey Shows

Jan. 27 (Bloomberg) -- Business leaders are increasingly confident amid expectations the global economic recovery will accelerate, a survey for the World Economic Forum in Davos shows.

Eighty-one percent of 1,198 chief executive officers in 52 nations expressed confidence in the next 12 months, the most since 2008 and up from 64 percent last year, the poll by PricewaterhouseCoopers LLP showed today. Thirty-one percent described themselves as “very positive,” an increase of 10 percentage points from a year ago, and 18 percent said they were pessimistic, almost half 2009’s level.

The sentiment reflects the global economy’s rebound from the worst recession since World War II as companies such as Apple Inc. and Siemens AG reported profits that exceed analyst forecasts. The International Monetary Fund yesterday predicted worldwide gross domestic product in 2010 will grow by the most since 2007.

“The fears of a global economic meltdown have receded and CEOs are more upbeat,” Dennis M. Nally, global chairman of New York-based PwC, said in a statement. “CEOs must now shift their mindset to making strategic decisions about investing in growth in order to gain competitive advantage.”

The poll was released as CEOs Eric Schmidt of Google Inc. and Deutsche Bank AG’sJosef Ackermann join more than 2,500 counterparts, academics and policy makers in the Swiss ski resort for the five-day conference of debate and deal-making.

‘Grim’ Memory

They meet a year after what Harvard University Professor Kenneth Rogoff called the “grimmest Davos” ever, when the world’s economy and financial markets were plagued by crises.

Twelve months later, both are recovering after central banks cut interest rates to record lows and flooded economies with cash, while governments spent more than $2 trillion in emergency measures and bailed out banks including New York- based Citigroup Inc. and Royal Bank of Scotland Group Plc, which is headquartered in Edinburgh.

The IMF yesterday raised its forecast for 2010 global growth to 3.9 percent from an October projection of 3.1 percent. Data released yesterday showed business confidence rose in Germany to its highest in 18 months in January and consumer confidence in the U.S. climbed to the highest since September 2008.

Apple, located in Cupertino, California, reported on Jan. 25 a 50 percent jump in fiscal first-quarter profit, buoyed by holiday orders for computers and iPhones. Munich-based Siemens, Europe’s largest engineering company, yesterday said earnings at its industrial, energy, and health-care units rose 11 percent to 2.26 billion euros ($3.2 billion) in the first three months of the fiscal year, exceeding a 1.82 billion-euro prediction by analysts.

CEO Concerns

Tempering the optimism, 60 percent of executives told PwC that recovery in their economies will be delayed until the second half of this year, while 65 percent said a lengthy recession remains the biggest fear.

While the MSCI World Index of stocks has surged about 66 percent since its low of last March, it had its largest fall since October last week. President Barack Obama is seeking curbs on the size and trading activities of financial institutions, while China moved to remove support from its economy. Investors are also pressuring governments to cut the debt they ran up fighting the turmoil.

‘Worst Is Over’

“There will be a strong sense in Davos of relief the worst is over, but a lot of long-term questions remain about the world economy” said Stephen King, London-based chief economist at HSBC Holdings Plc, who will be attending the forum.

Over-regulation was the second biggest concern of executives. Even after the crisis triggered bailouts of financial companies, only about a half the CEOs agreed that government ownership helps stabilize an industry in turmoil.

After almost half cut payrolls last year, almost 40 percent of those polled by PwC said they expect to increase their staffing this year, compared with 25 percent who anticipate cutting jobs. Almost 90 percent of CEOs said they had cut costs in the last year and 80 percent said they would seek to do so over the next three years.

Confidence was highest outside the major industrial economies. While about 80 percent of executives in North America and Western Europe reported confidence for 2010, 91 percent in Latin America and China were positive and 97 percent in India. More than 90 percent of those surveyed said they were confident in their growth through 2012, a similar prognosis to last year.

Seeking to avoid a repeat of the crisis, 41 percent of business leaders said they plan to make “major changes” to how their company approaches risk and 43 percent said they would make some alterations. “Their most common regret about how they dealt with the recession was not fully understanding the risks, and failing to respond more quickly,” said PwC’s Nally.

To contact the reporters on this story: Simon Kennedy in Davos at skennedy4@bloomberg.net

To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net