Belgian CEOs are less positive about the growth in the country than a year ago. The main challenges according to our business leaders are (1) cyber security, (2) emerging and disruptive technologies, (all at 3) climate change, (4) the quest for talent and operational risks and protectionism. This was revealed by the CEO Outlook global survey, performed by service provider KPMG, among more than 2500 CEOs of companies with revenues exceeding USD 500 million.
Belgian CEOs are slightly less optimistic regarding the country's growth prospects than a year ago. Today, 72% of Belgian business leaders say they are confident that the economy is gearing up, last year it was 84%. This is lower than the global average, with 83% of CEOs worldwide indicating confidence in growth this year.
While we certainly wouldn't call this a negative outlook, it is noticeable that last year's optimism has dampened a bit. Koen Maerevoet, CEO of KPMG in Belgium: "We notice two main causes. On the one hand, the persistent uncertainty due to geopolitical events such as Brexit and the trade war between the US and China. Last year the assumption was that we would have a negotiated Brexit, but now a no-deal seems to be more likely. On the other hand, we notice that a lot of companies are experiencing problems with filling job vacancies. Recruiting and retaining talent is no longer just the responsibility of the HR department, but also of senior management. This was clearly evident in our survey."
When asked about the greatest risk to their companies' growth, 36% of Belgian captains of industry indicated that cyber security is what keeps them up at night. Other risks are emerging and disruptive technologies (16%), climate change (12%), operational risks (12%), the search for talent (12%), protectionism (8%) and complex regulations (4%).
Globally, CEOs have different views of these risks: climate change (21%), emerging and disruptive technologies (19%), protectionism (16%), cyber security (14%), operational risks (14%), complex regulation (7%), low-interest risk (3%), reputational damage (3%), dysfunctional supply chain (2%) and the search for talent (2%).
We note that Belgian CEOs consider cyber security much riskier than the global average, while climate change is less high on the agenda, despite active debate in their country on this issue.
It seems Belgian CEOs see attracting talent as a greater threat to their companies' growth than their counterparts abroad. While 12% of our CEOs indicate this to be the greatest risk, only 2% of CEOs worldwide agree. 60% of Belgian CEOs also indicate that finding suitable employees is a major challenge. However, our business leaders assume that there will be a lot of vacancies to be filled in the coming years: 32% of CEOs presume an increase of between 5 and 10% and 68% between 0 and 5% over the next three years, while the figures were 8% and 84% respectively last year.
There appears to be a mismatch between the increasing supply on the labor market and the need to fill specific vacancies. Koen Maerevoet: "We notice – among our clients but also within their own organization – that finding and retaining employees is becoming a real challenge and even a risk. The growth of our knowledge-based economy depends to a large extent on finding the right people. Digitization further strengthens this tendency because companies are mainly looking for specialists in IT and artificial intelligence. People must also be properly deployed and constantly retrained."
Belgium is one of the most globalized economies in the world. Asked about their expansion plans, 68% of Belgian CEOs indicate that they prefer to look at growth markets – such as East Asia, Central and Eastern Europe and Latin America – rather than to developed markets such as the United States and Western Europe.
It is also striking that companies wishing to focus on growth markets prefer countries that form part of the New Silk Road (the Belt and Road Initiative), a development strategy initiated by the Chinese government to strengthen its geopolitical and economic position through a Eurasian trade network and large infrastructure projects. 64% of Belgian CEOs are focusing on the BRI, in line with the global average of 65%. This Chinese strategy has certainly had a great impact. Companies worldwide – and in Belgium too – are allowing it to determine their own international strategies.
Innovation is a driver of growth for companies. However, it appears that Belgian CEOs feel that their business needs to work harder to innovate: 52% of Belgian CEOs indicate that their business needs to increase innovation efforts over the next three years, while last year this was only 12%. 64% of our business leaders also indicate that growth is linked to the ability to respond to disruptive change.
Another topic that is high on our society's agenda is sustainability and climate change: 60% of Belgian CEOs believe that the shift to a low-carbon economy will largely determine the growth of their business. However, this is still a lot lower than the global average of 76%. Maerevoet: "All business leaders are not yet convinced that this shift towards a low-carbon society will bring added economic value. However, innovation and sustainability go hand in hand."
In January and February of 2019, KPMG surveyed more than 2500 CEOs of companies with revenues exceeding USD 500 million worldwide. For the second year in a row, 25 Belgian CEOs were also included in this survey of international top companies.