CEOs in Cyprus share bleak outlook on economy and risks landscape

13 March 2023 6 min. read
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In sharp contrast to twelve months ago, CEOs in Cyprus are – in similar fashion to their global counterparts – relatively pessimistic about global economic growth and their company prospects over the next year, according to PwC’s latest survey among chief executives.

Building on PwC’s global CEO Study (which is traditionally released at the start of the World Economic Forum in Davos), the Cyprus member firm conducted its own CEO study, canvassing the views of over 150 CEOs in the country.

Globally, the sentiment was evident. Pessimism about global economic growth has hit its highest point since the aftermath of the global financial crisis. Today, the sentiment among Cypriot CEOs is much aligned to the global picture.

Global economic growth

A significant majority (69%) of CEOs in Cyprus hold a pessimistic outlook on the global economy, anticipating a decline in growth in the next 12 months. This marks a sharp contrast from the previous survey’s findings, which recorded only 19% of CEOs expressing such pessimism. Last year, optimism was dominant, with 75% of CEOs holding a positive outlook.

The current reversal of optimism is the result of various factors, says PwC, including the ongoing war in Ukraine, the energy crisis, inflation, and supply chain disruptions, all contributing to political and economic instability.

“The multiple crises we are facing today are mainly due to the acceleration of the so-called long-term megatrends and the difficulty of getting ahead of them. Some events of recent years such as the pandemic of Covid-19 and the war in Ukraine have accelerated mega trends such as technological innovation and evolution, climate change, geopolitical shifts and social uncertainty,” said Philippos Soseilos, CEO and Chairman of PwC in Cyprus.

CEOs in the Eurozone and globally expressed comparable levels of pessimism, at 74% and 73% respectively, indicating that they anticipate a decline in their country’s economic growth.

Territory economic growth

In terms of how CEO perceive the economic growth prospects of their own country, only 33% of business leaders in Cyprus hold a positive view, while a majority of 56% anticipate a decline in growth in the next 12 months. However, CEOs express more optimism regarding their own country’s growth prospects compared to the outlook on the global economy, the PwC report found.

On a company level

Notably, CEOs in Cyprus, the Eurozone, and globally exhibit higher levels of confidence in their own company’s revenue growth prospects than in the global economic growth. In Cyprus, 38% of CEOs are highly confident, and 48% are moderately confident about their company's revenue growth over the next year.

In the Eurozone, 36% of CEOs are highly confident, and 49% are moderately confident. Globally, 42% of CEOs are highly confident, and 47% are moderately confident about their company's revenue growth, similarly to Cyprus.

Revenue growth prospects

Top executives in Cyprus, Eurozone, and globally are also increasingly confident in their company's profitability and revenue growth prospects over a three-year period. In Cyprus, 43% of CEOs are highly confident, and 48% are moderately confident. In the Eurozone, 48% are highly confident, and 46% are moderately confident. Globally, 53% are highly confident, and 43% are moderately confident.

Regarding actual profitability in the past two years, 50% of CEOs in Cyprus reported significantly better results than – what they believe are – their closest competitors. This was also the case for 46% of CEOs in the Eurozone and 43% globally.

However, optimism regarding potential revenue growth increase has diminished compared to the previous year. In their endeavors to push for growth, CEOs are eyeing strengthening existing partnerships, entering new markets, establishing partnerships within the broader ecosystem, and inorganic activity.

From an international trade and investment perspective, Greece emerged as the top choice of CEOs (at 36%), not surprisingly given the close economic ties between the two countries. The UK was a distant second with 26%, followed by Germany with 18%. Interestingly, some CEOs also mentioned emerging markets such as China and India as potential growth drivers, highlighting the importance of expanding their businesses beyond traditional markets.

Global threats and concerns

What’s keeping CEOs awake at night?

Three immediate threats are most likely to keep CEOs awake at night: the ongoing war in Ukraine (and broader geopolitical conflict), the energy crisis, and surging inflation.

Over a five-year outlook, CEOs in Cyprus feel equally exposed to a broader basket of risks, with geopolitical conflict ranking first at 42%, followed by inflation at 34% and macroeconomic volatility at 30%. Cyber risks and climate change, as well as a range of other risks, further exacerbate the overall risks and threats landscape for company leaders.

To mitigate their exposure to geopolitical conflict, 48% of CEOs in Cyprus plan to adjust their presence in current markets and expand into new ones, while 42% consider diversifying their company’s product or service offerings.

Global threats and concerns

CEOs are also seeking opportunities to cut operating costs, reduce spending on people and remuneration, and half of the CEOs are considering a review of projects under way and other important initiatives.

Notably, 8 out of 10 chief executives in Cyprus said that they will not decrease their current employees’ compensation, regardless of the circumstances. Furthermore, a considerable proportion of CEOs (65%) aim to not downsize their workforce, and 63% state that they will not postpone any contractual agreements they have made.

“The CEOs from Cyprus who participated in our survey gave us a clear picture of what gives them optimism, but even more so of what worries them during current difficult times. The bet now is to move in a timely and transformative manner across the entire spectrum of society, economy, entrepreneurship and governance,” concluded Soseilos.