Worldwide economic prospects take toll on Asia Pacific
6 September 2012
Worldwide economic prospects take toll on Asia Pacific outlook, yet APEC economies projected to nearly double during the next decade
Economic disruption, including possible recession in the United States, the Eurozone crisis and the slowing of expansion in China have taken a toll on the confidence of CEOs in the Asia-Pacific region, according to PwC’s 2012 APEC CEO Survey.
Just 36% of executives surveyed by PwC said they are “very confident” of business growth over the next 12 months. Longer term, however, prospects improve, with more than half (54%) expressing a high level of confidence for the next three to five years.
PwC New Zealand’s Chief Executive Bruce Hassall is not surprised by the results and says the confidence gap underlines the challenges for businesses operating today, verses the promise of growth tomorrow in the Asia-Pacific.
“Businesses have become battle hardy after navigating their way through the protracted GFC, and while there is still some lingering wariness, CEOs know they’ve learnt how to manage through difficult economic conditions and diversify their operations. The work has been done and CEOs are now focused on creating the future they choose to make.
“And looming large on the horizon is the overall trend of rising incomes and the fact consumer spending power among APEC economies is projected to nearly double through 2021. That creates an enormous opportunity for New Zealand,” says Mr Hassall.
PwC’s 2012 APEC CEO Survey also revealed CEOs believe the region is on track to achieve greater economic integration, which is a top priority for the Asia-Pacific Economic Cooperation (APEC), whose summit meeting begins in Russia tomorrow.
Nearly half of CEOs said removing barriers to trade in services is a key to greater integration within the 21 APEC members. CEOs also called on APEC’s political leaders to harmonise regulations across the region and to do more to encourage labour mobility and the free flow of investment.
CEOs said the top economic
risks to their growth were a spike in oil prices to beyond
US$150 per barrel, a U.S. recession, breakup of the
Eurozone, and the slowing of China's growth to below 7.5% of
gross domestic product.
Other top concerns cited were a major disruption of the Internet or cyber attack, and a pandemic or natural disaster.
Asia-Pacific CEOs said China and the United States were their dominant targets for investment over the next three to five years. Resource-rich areas such as Russia, Indonesia and Australia, and Asian services capitals like Hong Kong and Japan were also cited as top draws for investment.
Mr Hassall says, “We’ve
witnessed China become the world’s second largest economy.
The economic centre of the world has moved to the East and
this is great for New Zealand companies as we’re in the
right place at the right time.
Yet, the survey results are a timely reminder that New Zealand companies aren’t alone in chasing China, with China coming out on top as the dominant target for investment by companies based in fast-growing and mature economies.”
Meeting the need for talented, highly skilled workers remains a top priority for CEOs in Asia-Pacific; 40% said they plan to expand their workforce by at least 5% in the next three to five years. But, 42% think talent shortages in the region will worsen over the same time period.
To meet the intense competition for talent CEOs said they will offer employees salaries that are more competitive, better apprenticeship and intern programs, more non-financial rewards and customised benefits, and international assignments.
Mr Hassall says, “With 15 out of the 21 APEC economies predicted to outpace average global growth over the next decade, it’s important those gathering at the 2012 APEC CEO Summit do seek real progress on addressing challenges and expanding possibilities in the Asia Pacific Region.”
In other findings:
• Nearly 60% of Asia-Pacific CEOs said there is a ‘critical’ need to improve their use of technologies like cloud computing, digital devices and social media in order to meet customer and employee expectations.
• More than half listed a deep pool of talent and strong protections for intellectual property as most important to innovation.
• A majority (73%) said they expect infrastructure improvements will continue in such areas as transportation and water treatment.
• About 40% of CEOs said potential trade
agreements by both the Association of Southeast Asian
Nations (ASEAN) and the Trans Pacific Partnership (TPP)
could have potentially significant impact on their
Notes to editors:
• The full report on the survey results can be found at www.pwc.com.
Carried out by PwC International Survey Unit, the APEC CEO Survey 2012 was conducted between June and August 2012 covering 376 CEOs and industry leaders in 40 economies, including all 21 APEC economies.
• About PwC
PwC firms help organisations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with close to 169,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.
• About APEC
The Asia-Pacific Economic Cooperation (APEC) forum is the premier economic organisation in the Asia-Pacific region. Established in 1989 by 12 economies, APEC fosters growth and prosperity by facilitating economic cooperation and expanding trade and investment throughout the region. APEC’s 21 member economies today account for 55 percent of global GDP.
The APEC CEO Summit is the Asia-Pacific's premier business event, drawing thousands of economic and business leaders from around the region and beyond. The 2012 CEO Summit will be held from 7th to 8th September in Vladivostok, Russia.