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. The results are now available to view in full at https://oxfordbusinessgroup.com/blog/oliver-cornock/obg-ceo-surveys/race-returns-ceos-chart-risks-and-rewards-emerging-markets-face
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%) of CEOs felt upbeat about the coming year, down from 82% in 2018.
Expectations were also lower in Asia, where just 56% of executives described their outlook as positive or very positive, down from 76% 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%) 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% 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% 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%.
However, responses varied greatly between markets. Africa was perceived to have the most challenging lending environment, with a weighty 60% of business leaders located in the region citing access to credit as difficult or very difficult, significantly higher than in Latin America (39%) and the Middle East (27%).
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%, although in 2016 it stood at a much higher 70%. Significantly, business leaders in the Middle East were the most positive about the competitiveness of their tax frameworks, despite the historic introduction of 5% 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%,” 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.
About OBG CEO SURVEYS
OBG Global CEO Survey Copyright (c). All rights reserved.
This survey has been designed to assess business sentiment amongst business leaders (Chief Executives or equivalent) and their outlook for the next 12 months. Unlike many surveys, the OBG CEO survey is conducted by OBG staff on a face-to-face basis, across the full range of industries, company sizes and functional specialties. The results are anonymous.
This Global CEO Survey is based on nearly 7000 responses from companies within the following parameters, among others:
• 80% of companies surveyed were private
• 39% of companies surveyed were international
• 16% of companies surveyed were regional
• 45% of companies surveyed were local
The data generated allows for analysis of sentiment within an individual country, as well as regionally and globally. Additionally, comparisons can be drawn between both individual countries and regionally. The results are presented statistically within infographics and discussed in articles written by OBG Managing Editors. OBG provides this survey, infographics and accompanying analysis from sources believed to be reliable, for information purposes only. OBG accepts no responsibility for any loss, financial or otherwise, sustained by any person or organisation using it.
For further information on the content of the survey, please contact Oliver Cornock at email@example.com. Should you wish to reproduce any element of this survey, infographics and accompanying analysis, please contact firstname.lastname@example.org. Any unauthorised reproduction will be considered an infringement of the Copyright. For further details about OBG and how to subscribe to our widely acclaimed business intelligence publication, please visit www.oxfordbusinessgroup.com.