CEOs head to Davos more pessimistic about 2013

[January 23, 2013]  DAVOS, Switzerland (AP) -- As high-powered CEOs flock to the snowy Swiss resort of Davos, they are loaded down with baggage -- not just skis and iPads but concerns about the global economy, public mistrust, disappearing jobs and a heap of other challenges.

New survey results Tuesday showed a steady drop in the number of CEOs worldwide who are "very confident" that their companies will grow this year. The number fell from 48 percent in 2011 to 36 percent this year.

Amid this pessimism, most of them are carefully sticking to a few investments in tried-and-true markets, according to the survey by accounting firm PricewaterhouseCoopers.

"Most are saying that the global economy will stay about the same for the next 12 months. So, not encouraging, maybe not discouraging, but clearly that's affecting their outlook for their own companies' growth prospects," PwC chairman Dennis Nally told The Associated Press in an interview.

"The degree of confidence across the board is really down, regardless of whether you're in a developing market or a developed market," he said.

It is down even in high-flying economies like China and Brazil. The most upbeat country was Russia, where 66 percent of CEOs are "very confident" of revenue growth in 2013, Nally said.

He called the survey results a strong message to governments that they must fix economic problems, including disputed regulations, government deficits and tax issues.

"All of those are impacting CEOs' levels of confidence to really deal with their businesses on a go-forward basis," he said in the PwC Lounge, an ultra-chic Davos party room with white sofas and chairs and orange and red flowers.

Uncertainty about tax and spending policies is at the root of the gloom, said John Veihmeyer, CEO of accounting firm KPMG's U.S. operations. He called it frustrating that U.S. government solutions "seem to be within our control" but still out of reach.

"I think we have an opportunity for the U.S. to lead the world onto a path of stronger economic footing and very robust economic recovery over the next five years," Veihmeyer told AP. "It's not going to be easy. There's going to be pain and sacrifice."

Nearly a quarter of the CEOs surveyed plan further job cuts -- yet more than half of them say they have trouble finding people with the right job skills.

The U.N. labor agency said this week the jobs crisis has worsened; there were 197 million people who couldn't find a job in 2012 and another 39 million who have given up on looking for one.

Nally worries about a "lost generation" of job seekers and encourages young people to focus on gaining skills that are in demand -- skills in areas such as the sciences, math, engineering and other technical areas.

Heading Tuesday into the glitzy World Economic Forum, where over 2,500 members of the political and corporate elite will debate the world's top economic issues this week, many participants said their top worries are prospects for social unrest, a U.S. recession, cyber-attacks, natural disasters and a breakup of the 17-nation eurozone.

In a reminder of the tangible threats facing world leaders, more than 3,000 soldiers are on hand in Davos to guard against terrorist or other threats to the gathering, while police and other security officers tightly sealed the Alpine town to ward off protests.

Business leaders also recognize that public trust in corporations -- including CEOs -- is waning. The survey questioned 1,330 corporate leaders in 68 nations between September and December, and more than half said they plan to do more to build an "ethical culture" at their firms this year.

"We've got to start to rebuild that trust," Nally said.

CEOs may be turning more introspective now that the world has escaped, at least for the time being, another financial meltdown. A U.S. economic recovery seems to be expanding. Central banks -- especially the European Central Bank -- have helped ease Europe's three-year financial crisis, and governments in countries such as Spain and Ireland have stepped in to rescue their banks from the risk of collapse from bad property investments.

Yet the survey found that only 18 percent of the CEOs predict an economic improvement in 2013, and more than a third of them worry that a lack of trust in their industries puts their company's growth at risk.

The solution, Neely said, is to dig deeper and build a more fundamental ethical culture.

"I think it starts with your own organization, quite frankly, and I think it starts with the CEO, the tone at the top. What does an organization stand for? What is its purpose?" he said.

"Is it just to deliver short-term profitable results to the shareholder group?" he asked. "Or is there a greater purpose in terms of the role of business in society today?"

[Associated Press; By JOHN HEILPRIN]

Angela Charlton in Davos, Switzerland, contributed to this report.

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