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Executives from around the world shared their views on risk versus reward in emerging markets against a challenging economic backdrop in the first Global CEO Survey carried out by Oxford Business Group (OBG).
OBG began producing its CEO Surveys in 2016 as a way of giving
licence-holders a handle on business sentiment in the economies it covers, termed the Yellow Slice markets, in reference to its corporate colour. Since then, they have become a highly popular and integral part of the global research and advisory firm’s portfolio of research tools.
The Global CEO Survey is a new addition to the suite, marking the first time that OBG has collated, compared and published answers to a series of questions from business leaders worldwide rather than in-country or regionally.
To gauge business sentiment, OBG asked around 7000 C-suite
international executives from across the industries a wide-ranging series of questions on a face-to-face basis.
Unsurprisingly, given the current geopolitical and economic climate,
respondents were less positive about the prospects of their respective business environments in 2020 than in previous years. The trend was especially pronounced in markets covered by OBG in Latin America, most likely due to political uncertainty, where less than half (45 per cent) of CEOs felt upbeat about the coming year, down from 82 per cent in 2018.
Expectations were also lower in Asia, where just 56 per cent of executives described their outlook as positive or very positive, down from 76 per cent in 2018, perhaps prompted in part by a fall in demand from China and the
uncertainty created by its trade war with the US.
Yet, despite the challenging business environment, executives remained bullish about the likelihood of their companies expanding in the coming
months. Just under two-thirds (62 per cent) of interviewees said they thought their firm was likely or very likely to make a significant investment in the coming year, matching the percentage in 2018 and up from 59 per cent in
2016.
It is worth noting that the survey was of course conducted before the
outbreak of covid-19 which is currently rattling global markets and sentiment alike.
While raising capital is a key part of the investment process for many
business leaders, the lending environment has become increasingly constrained of late across many of the Yellow Slice economies. The findings in OBG’s survey reflected this trend, with 44 per cent of respondents
describing the ease of access to credit in their market as difficult or
very difficult – similar to the average percentage in 2018, but up
significantly from 2016, when it stood at just 28 per cent.
However, responses varied greatly between markets. Africa was perceived to have the most challenging lending environment, with a weighty 60 per cent of
business leaders located in the region citing access to credit as
difficult or very difficult, significantly higher than in Latin America (39 per cent) and the Middle East (27 per cent).
Results were also mixed in answer to a question about business
leaders’ local tax climate. Overall, the percentage of respondents who
viewed their tax environment as competitive has remained steady since 2018 at 49 per cent, although in 2016 it stood at a much higher 70 per cent .
Significantly, business leaders in the Middle East were the most
positive about the competitiveness of their tax frameworks, despite the
historic introduction of 5 per cent VAT in the Gulf Cooperation Council
countries from 2018 onwards.
In keeping with the findings published in OBG’s surveys to date,
respondents identified leadership as the skill most in demand within
their sector. However, regional divides were also evident, with
interviewees in Latin America and the Middle East ranking research and development second in terms of competencies needed in the workplace, while those in Asia and Africa opted for engineering.
Introducing OBG’s first Global CEO Survey, Oliver Cornock,
Editor-in-Chief, said the research tool had played a key role since its
launch by providing licence-holders with an understanding of how
business leaders in the Yellow Slice markets viewed their own
environments from the standpoint of growth, taxation, regulation, access to credit and availability of labour.
“Sentiment is of course intangible, but it is an all-important factor
in the decisions that businesspeople and investors make when they weigh up their risk appetite. In turn, sentiment informs the level of
confidence with which they view a market,” he said.
Cornock acknowledged that in an era of globalisation, the slowdown in global growth, sparked by a combination of heightened geopolitical tensions, commodity price volatility and the US-China trade war, had inevitably weighed on Yellow Slice economies, as well as more developed markets.
“Unsurprisingly, therefore, our respondents were more negative about the prospects of their respective business environments than in previous years, with the percentage of CEOs with positive or very positive outlooks falling by 18 per cent, ” he noted. “However, with moribund growth in many established markets, the Yellow Slice countries in Asia, Latin
America, Africa and the Middle East, when viewed as a bloc, with their strong economic fundamentals, youthful populations and positive average GDP figures, present a compelling picture.”
Cornock’s viewpoint can be found in full on OBG’s Editor’s Blog,
alongside additional analysis by all four of OBG’s Regional Editors on
the markets that they cover. Titled “Next Frontier”, the blog serves
as a platform for OBG’s experts to share their thoughts on the latest
developments taking place across the sectors of the 30+ high-growth
markets covered by the company’s research.
The OBG CEO Surveys feature in the Group’s extensive portfolio of
research tools. The full results of the surveys are available online and in print. Similar studies are also under way in the many markets in which OBG operates.
