John Parkhouse, PwC Luxembourg CEO;
Credit: Olivier Toussaint
PwC Luxembourg recently published a report dedicated to the Luxembourg findings of PwC's Global CEO Survey 2023.
For the past 26 years, PwC has surveyed chief executives for its Global CEO Survey. PwC Luxembourg takes part in this survey on a biennial basis in order to obtain insights from Luxembourg CEOs in both the financial and non-financial sectors and thus get an idea of how domestic CEOs fare compared to their global peers and where the country's economy is heading.
Whilst PwC published the 26th edition of its Global CEO Survey on 16 January 2023, the "Luxembourg Findings" were revealed on Wednesday 8 February 2023. The CEO Survey 2023 - Luxembourg Findings report dives deep into Luxembourg CEO sentiment (versus global CEO sentiment) on an array of topics such as local GDP evolution, companies' prospects for revenue growth, profit margin and return on assets (ROA), the Grand Duchy's resilience to extraneous shocks and key threats for the next five years.
According to PwC Luxembourg, the detected optimism from the 2021 edition of the survey was disrupted due to the extraordinary macroeconomic and geopolitical shocks of 2022. Macroeconomic instability emerged as the predominant threat, but cyber risks also persist. Luxembourg-specific challenges centred on costs, talent and regulatory issues.
Faced with current macroeconomic and geopolitical developments, Luxembourg CEOs were by and large uncertain and uneasy about the near future, with 78% expecting global economic growth to decline in the coming year, mirroring the views of their global counterparts. At the same time, Luxembourg CEOs were slightly more optimistic regarding local economic growth, unlike several of the surrounding countries.
Inflation and macroeconomic volatility were the key threats looming on Luxembourg CEOs' horizons, with 41% and 34% seeing inflation as a key threat in the next twelve months and five years respectively, the highest figures among all threat categories. Macroeconomic volatility came in a close second, with 36% and 32% seeing it as a key threat in the next twelve months and five years respectively. These findings differ from those identified in the 2021 edition, when Luxembourg CEOs considered over-regulation and public health-related crises as the most significant threats they faced.
However, similar to the 2021 edition of the survey, cybersecurity remained one of the core preoccupations of Luxembourg CEOs, as 28% and 32% saw cyber risks as a key threat in the next twelve months and five years respectively; this remains consistently higher than their global peers.
Climate change appears to have taken a backseat in terms of perceived threat level - at least in relative terms and in the short term. Whereas 33% of Luxembourg CEOs saw climate change and environmental damage as a key threat to growth prospects in the 2021 edition, only 11% currently consider that their businesses will be extremely or highly exposed to threats in this regard over the next twelve months. This figure rose to 20% when CEOs were asked to take a five-year view.
"Today, we appear to be entering an era of 'polycrisis' [...] as we see a plethora of inter-related crises impacting the world and the business agenda, driving uncertainty and a need to focus more on the short-term, whilst not losing sight of the race of tomorrow," commented John Parkhouse, PwC Luxembourg CEO. "Naturally, Luxembourg CEOs have not been immune to the upheavals of recent months and, unsurprisingly, join their global counterparts in considering inflation and macroeconomic volatility to be the top threats they are facing. In Luxembourg, this is closely followed by cybersecurity-related challenges. [...] Talent is a key issue in most countries, but is seen as a bigger challenge in Luxembourg as we struggle to attract and retain a sufficient number of qualified people to sustain our growth and more needs to be done by the public and the private sector to address this issue."
According to PwC Luxembourg, the conclusion is that this moment of uncertainty should not be a cause for despair, but rather a springboard to usher in a new way of thinking among Luxembourg CEOs, rooted in stakeholder collaboration. The professional services firm argued that environmental, social and governance (ESG) along with investments in technological transformation, upskilling and cybersecurity represented valuable opportunities for Luxembourg CEOs and companies.
John Parkhouse noted: "We believe that Luxembourg and its business leaders are provided with an opportunity to not only weather the storms of today but rather to seize the opportunity to invest, upskill and collaborate with a view on building the foundations for an ever more prosperous tomorrow."
