Gloom Deepens Among World’s Chief Executives, Davos Poll Shows

Jan. 28 (Bloomberg) -- Gloom is deepening among business leaders, casting a pall over this year’s World Economic Forum in Davos, Switzerland.

Just one in five of 1,124 chief executives in 50 nations said they were very confident about prospects for revenue growth in 2009, down from half last year, and more than a quarter said they were pessimistic, a survey by PricewaterhouseCoopers LLP showed. The sentiment was the worst since the accounting and consulting firm began tracking the CEO outlook in 2003.

“The speed and intensity of the recession has rocked the psyches of CEOs and created a global crisis of confidence,” Samuel DiPiazza, PricewaterhouseCoopers’s New York-based CEO, said in a statement.

Such concerns are virulent as executives from JPMorgan Chase & Co.’s Jamie Dimon to Stephen Green of HSBC Holdings Plc join more than 2,500 counterparts, academics and policy makers in the ski resort for five days of soul-searching and deal- making. They meet as the world economy hurtles deeper into recession, banks add to more than a $1 trillion in writedowns and governments tighten their grip over the financial system.

“The outlook is pretty grim,” said Howard Davies, director of the London School of Economics and a former Bank of England policy maker who will be in Davos. “Things are not good and business surveys are coming out showing they’re getting even worse.”

Financial Calamity

What began as a financial meltdown 17 months ago has morphed into an economic calamity unseen since the Great Depression.

In the past year, Lehman Brothers Holdings Inc. and Bear Stearns Cos. have collapsed and officials around the world have committed trillions to prevent more from toppling. The Standard & Poor’s 500 Index is still falling after its worst year since 1937 as the U.S., Japan and Europe sink into their first simultaneous recession since World War II.

The executives polled by PricewaterhouseCoopers survey don’t see a turnaround soon.

Only about a third were very confident about growth in the next three years, down from 42 percent last year. Almost seven in 10 said their companies will be affected by the credit crisis, and 70 percent of those said they will delay planned investments as a result.

‘Impaired’ for Years

“The global economy is impaired for some years to come,” said Stephen Roach, chairman of Morgan Stanley Asia, who raised the prospect of a worldwide recession at last year’s conference. “The recovery, when it does come, is going to be very, very anemic.”

Just 13 percent of U.S. executives said they were “very confident” about revenue growth in the next 12 months, compared with 36 percent last year, while 15 percent in Western Europe expressed the same sentiment, down from 44 percent. Among developed economies, French executives were the most skittish, with just 5 percent calling themselves very optimistic.

Business leaders in emerging markets were more confident. Seven in 10 Indian executives expressed optimism about their company’s growth, as did about three in 10 of those in Brazil, Russia and China.

Job Cuts

One further bright spot: Only about a quarter of the business chiefs said they plan to cut payrolls in the coming year, while 35 percent said they intended to maintain staffing levels. That would be welcome news to workers as unemployment accelerates around the world with Home Depot Inc., Caterpillar Inc. and ING Groep NV among those axing positions this week.

The economic malaise will have social repercussions, the survey indicated. By a margin of more than three to one, executives said political and religious tension will increase internationally. Seven in ten said the gap between rich and poor people will widen.

As governments around the world react with new regulations designed to avert future crises, 55 percent of executives said they’re concerned that overregulation could retard growth.