HomeEconomy NewsDavos 2023: Top managements to focus hard on costs and managing them the best, says PwC's Bob Moritz

Davos 2023: Top managements to focus hard on costs and managing them the best, says PwC's Bob Moritz

PwC on Monday released its 26th Annual Global Survey. CNBC-TV18 spoke to Chairman of PwC Global Bob Moritz on the sidelines of the World Economic Forum in Davos, Switzerland, regarding key highlights of the survey, the outlook for 2023 and more.

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By Shereen Bhan  January 18, 2023, 12:30:53 PM IST (Updated)

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Davos 2023: Top managements to focus hard on costs and managing them the best, says PwC's Bob Moritz
PwC Global chairman Bob Moritz thinks higher interest rates will reduce access to free money for organisations who sort of "ride the curve" and the top managements across the world would sharpen their focus on cost further.


Moritz and Sanjiv Krishnan of PwC India spoke to CNBC-TV18 on the sidelines of the World Economic Forum at Davos, Switzerland.

On higher interest rates

With the COVID-19 pandemic and geopolitical factors such as the Russia-Ukraine war, central banks across major economies have increased their interest rates to combat inflation.

Talking about how the top management of companies across the world would deal with higher interest rates this year year, Moritz said there would probably be a hard focus on costs and managing them as best as possible. This would include taking inefficiencies out of their organisations. However, the CEOs will try to protect human capital as much as possible, he said. " Even in a slow economy, those with skills are going to be very valuable and very wanted around the world by employers," he said.

He said there is also a possibility of seeing certain organisations declaring bankruptcies. "Those organisations that sort of ride the curve, ride the wave, higher interestrates means they will not have access to free money, for lack of a better word. So we will see bankruptcies, we will see restructuring of debt," he said, adding that mergers and acquisitions would also trickle through at some firms.

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On pessimistic 2023 outlook of global CEOs

PwC on Monday released its 26th Annual Global Survey. One of the key highlights from the report was that 73 percent of the CEOs polled believe that they would see a decline in global economic growth over the next 12 months. This is the most pessimistic outlook in over a decade that the PwC Global Survey has put out.

While through the COVID-19 pandemic in 2020 and 2021, the CEOs were optimistic about growth, Moritz explained the reason for the pessimistic outlook this year.

"The CEO survey is focused specifically in comparison to last year. So last year coming out of COVID, we had an uptick, we had significant confidence that the prior year was difficult so this year would be better," he said. However, 2023 is going to be harder and there are a bunch of factors for the same -- macroeconomic volatility and disruption; combinations of macro economic implications to interest rates and inflationary pressures, particularly supply chains; and geopolitical pressures that are actually implicating the global economy big time.

On layoffs

"So those combination of factors are causing that pessimism on the economy as well. The question is how do CEOs manage through that," he said.

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Talking about layoffs, Moritz said that 60 percent of the CEOs are not looking at cutting jobs at present. "But what you are seeing is across certain sectors a little higher, getting a yes to that answer (layoffs). Chemicals and consumer in particular, globally, definitely are starting to potentially go in that direction," he said, adding that in the US, there is a higher proportionality of CEOs in the tech and financial services industry, that is doing the headcounts because they are trying to get ahead of issues.

On China

Moritz said that China was playing a global role in terms of investments, and many CEOs are seeing an opportunity in the country.

"CEOs are seeing an opportunity in China, but they are going to do it differently. And second, the CEOs in China are more positive compared to others around the world," he said.

Moritz added that China is still looked at as an investable opportunity. "We actually still see China as an investable opportunity. But we are seeing management teams that are already there or wanting to be, they are doing it in different ways," he said, adding that they are reorganising themselves in China for the benefit of the country's domestic consumption, and then maybe separately what they do in China for them and the rest of the world.

"So this way, they have maximum flexibility and maximum optionality, if in fact things go up or down in a significant way as they look ahead," he said.

Also Read: Davos 2023 | A look at the overwhelming presence of India at the World Economic Forum
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