Monday, 16 January 2017

Globalisation, the true way forward?

A PwC survey report questions the impact of free trade on climate change and inequality. 

In the article Larry Elliott from the Guardian reiterates that, "executives running the world’s leading companies share public scepticism about the benefits of globalisation and doubt whether breaking down barriers to trade has helped tackle climate change or inequality.

The annual health check of global boardrooms conducted by the consultancy firm PwC found the mood more upbeat than a year ago, despite the shockwaves caused in 2016 by the vote for Brexit and the victory of Donald Trump in the US presidential election.

But the survey, published to coincide with the World Economic Forum in Davos, found that the bullishness about the benefits of globalisation had diminished in the 19 years since PwC first polled executives at the end of the 1990s.

Business leaders said they remained positive about the economic benefits of free movement of goods, people and capital but questioned whether globalisation had done anything to narrow the gap between rich and poor or to stop global warming.

Trump’s arrival in the White House later this week has also raised concerns about protectionism. Almost three fifths of those questioned said they were worried about trade barriers going up, rising to 64% in the US and Mexico.

Bob Moritz, PwC’s global chairman, said: “Despite a tumultuous 2016, CEO confidence is moving back up – albeit slowly and still a long way from the levels we saw back in 2007. But there are signs of optimism right across the globe, including in the UK and US, where, despite predictions of a Trump slump and a Brexit exit, CEOs’ confidence in their company’s growth are up from 2016.”
Fears that global companies would shun Britain after the shock EU referendum result were not supported by the PwC survey, which showed more chief executives pinpointing the UK for investment than a year ago.

The survey fund that 89% of UK chief executives said they were confident about their own company’s growth prospects in the year ahead, up from 85% a year ago. Confidence about the prospect for revenue was highest in India, followed by Brazil, Australia and the UK.

The findings reflect the better than expected performance of the economy since the EU referendum last June and will be welcomed by Theresa May before her speech on Tuesday outlining the government’s aims in the Brexit negotiations.

A year ago, confidence across the globe was dented by plunging commodity prices, falling stock prices and concerns about a slowdown in China.
The 2017 survey found that 38% of chief executives were very confident about the outlook for their companies against 35% in 2016 and 29% said they expected the global economy to grow more strongly over the next 12 months, up from 27%.

The poll of almost 1,400 executives from 79 countries was conducted between September and December last year. Moritz said the findings showed that business leaders were aware of the disquiet that led to the political shocks of 2016.

“Public discontent has the potential to erode trust which is needed for long term sustainable performance. The real challenge here, though, isn’t just one of how CEOs navigate, it’s about the need for CEOs to have a deeper, two-way relationship with stakeholders, customers, employees, and the public,” Moritz said.

“Understanding the root cause of the potential discontent or perception is a critical first step towards communicating the benefits of business for society. There’s a lot at stake if we do not achieve inclusive global growth.”

Source: The Guardian