Call to diversify the economy, as corporate leaders peer into the future
A Bermuda business leader has called for more economic diversification and tourism innovation to move the island past the shock of two years of pandemic-induced economic stagnation.
The call came from Arthur Wightman, territory leader, PwC Bermuda, as he released the results of a survey of hundreds of corporate chief executives from around the world.
PwC’s 25th Annual Global CEO Survey revealed decreasing optimism for the international economy by CEOs in four of the world’s major economies.
But within Mr Wightman’s comments about the world around us, there was a tone of concern about what was happening right here at home.
He said: “Optimism in the insurance industry reflects better than expected financial performance from continued rate hardening and global economic recovery. The insurance and reinsurance sector’s resilience has been a bright light in Bermuda’s economy.
“The continuing hard market and investor appetite for reinsurance is supporting further capital inflows in 2022. The life reinsurance, captives, ILS and legacy sectors are all showing buoyancy.”
He added: “Unsurprisingly, CEOs in the hospitality and leisure sector are the least optimistic about the coming year as they continue to grapple with the devastating effects of the pandemic.
“As a tourism dependent economy, Bermuda has faced an unprecedented shock emphasising the importance of mitigating the socio-economic impacts on the lives this sector sustains.
“Innovative tourism strategies are required to rebound as the pandemic moves to endemic status and competing jurisdictions throw open their doors.
“Similarly, the country needs more economic diversification to better weather such shocks in the future.”
PwC’s 25th Annual Global CEO Survey showed that the decline in optimism for the global economy came most notably in the US, down from 88 per cent a year ago to 70 per cent.
It was also slightly down in Brazil, dropping seven points to 77 per cent. In China, it was down nine points to 62 per cent and in Germany down four points to 76 per cent.
This may have been as inflation and supply-chain constraints became more of an issue, the report said.
But around the world, CEO optimism hit a 10-year-high with more than three quarters of CEOs, or 77 per cent, predicting that the global economy will improve. Only 15 per cent expected worsening conditions.
It is similar to last year when CEO optimism for 2021 was 76 per cent, although decidedly better than 2020 when more than half (53 per cent) of CEOs predicted a declining economy.
But the report was largely positive, although cyber and health risks rank as top global threats followed closely by macroeconomic volatility.
Also, net-zero commitments are lagging for many, with fewer than a quarter of CEOs saying their companies had already made commitments.
The findings come from a poll of 4,446 CEOs in 89 countries and territories, between October and November 2021.
More than half of the respondents reported high levels of confidence about their own prospects for revenue growth over the next 12 months.
The report said that among the CEOs expressing a more tepid outlook were those in the automotive sector (46 per cent), grappling with semiconductor shortages, and in the hospitality and leisure sectors (44 per cent), which feel the impact of the lingering effects of the pandemic on travel.
There was general optimism among CEOs for economic growth in 2022 but the perspective varies widely across individual countries and territories.
Among the largest territories, optimism is highest in India, where 94 per cent of CEOs anticipate global growth in the coming year, up from 88 per cent last year.
Optimism rose from 67 per cent to 83 per cent among CEOs in Japan, and in the UK, they are up from 77 per cent to 82 per cent.
While US CEOs may have been less sanguine on the global economy, they were comparatively confident about their own companies’ growth prospects, with 40 per cent extremely confident about achieving revenue growth in 2022. India CEOs were similarly confident in their companies’ outlook.
Mr Wightman said: “The chief executives who responded to our 25th Annual Global CEO Survey display optimism about continued economic resilience, but they are also well aware of potential threats that could impact their organisations over the coming 12 months, including macroeconomic volatility, cyber and health risks.
“CEOs in financial services, in particular, are concerned about cyber threats.
“While threats such as climate change and social inequality are further down the list, it is critical not to lose focus on these more long-term issues as they will define what sort of world we live in and hand down to the next generation.
“Environmental, financial and societal pressures are converging and today’s leaders must solve a new equation.
“Most upbeat of all for the coming year are CEOs of private equity firms — 67 per cent of whom are highly confident about their company’s growth, and also technology firms (64 per cent) and insurers (63 per cent).
Bob Moritz, global chairman, PwC said: “While the ongoing pandemic and emergence of new variants cast a shadow over the year, the high level of CEO optimism we found speaks to the strength and resilience of the global economy and the ability of CEOs to manage through uncertainty.
“There is nothing ‘normal’ about the world we are working in, but we are getting used to it. We are seeing differences in confidence among countries, and there is no shortage of challenges to navigate, but it is encouraging that CEOs we spoke with, on the whole, feel positive about 2022.”