More than half of the CEOs surveyed in Bangladesh are confident that their business will grow in the short-term (next 12 months) as well as in the medium term (3 years).
PwC Bangladesh on Thursday published the Bangladesh perspectives of PwC's 26th Annual Global CEO Survey, which polled 4,410 CEOs in 105 countries between October to November 2022, including 32 CEOs from Bangladesh.
The global report, launched at the World Economic Forum's Annual Meeting in Davos earlier this year offers an insight into how CEOs are navigating the most pressing issues of the day, reads a press release.
Opportunities and challenges
While 66% of the CEOs in Bangladesh feel that global economic growth will decline over the next 12 months, 53% of them have shown confidence that their own businesses will grow in the year ahead.
The survey reveals that CEOs in the country today are very focused on dealing with economic challenges through diversifying their products and services, reducing operating costs and increasing the prices of their products and services.
In fact, 4 out of 5 CEOs surveyed in Bangladesh stated that they are either already doing these/have done these or are considering doing these in the next 12 months.
This zeal to emerge stronger from the current global scenario is not new for Bangladesh as it has been demonstrating strong economic growth during the last five years – including the year of the pandemic-induced lockdowns.
In 2020, when most of the world economic jurisdictions posted negative growth, including many emerging countries, Bangladesh posted positive economic growth of 3.4%.
Chairperson of PwC in India and Bangladesh Sanjeev Krishan said: “From my various interactions with business leaders in Bangladesh, I continue to see growing levels of optimism and confidence in the market potential.”
“This has been reiterated by our survey findings with more than half of the CEOs who participated, telling us that they are confident about the growth of their own businesses in the short-term and in the medium term (between 12 months and 3 years). Despite the looming threat of global headwinds, this level of certainty highlights the region's resilience,” he added.
Speaking of challenges, CEOs feel that they will be most exposed to inflation, macroeconomic volatility and geopolitical conflict for the next 12 months. All three issues are potent enough to compound and reinforce each other.
For instance, the recent geopolitical uncertainties have increased fuel costs in Bangladesh, which in turn increased the cost of electricity while rising inflation hiked the prices of raw materials.
Collectively, these issues are impacting the production of export-focused manufacturing factories, thereby increasing the risk of depleting foreign reserves and increasing macroeconomic volatility. In fact, the picture does not change much for the CEOs' mid-term outlook towards exposure to threats, suggesting a prolonged impact of the three issues.
Concerns around viability and profitability
Less than 50% of CEOs in Bangladesh are optimistic about the long-term economic viability of their businesses and think their current business model will be viable for more than ten years.
This is lower than global findings, where 59% of CEOs worldwide believe that their businesses will last more than ten years. However, the bright side to this is that CEOs in Bangladesh recognise the potential for disruption ahead.
Therefore, the need for transformation, in the long run, is deemed critical and most are not treating it as a choice anymore.
In contrast with their global peers, CEOs in Bangladesh are more concerned about the ongoing global supply chain disruption than regulatory changes due to the country's significant reliance on the import of raw materials as well as strong dependence on exports and remittances.
Technological disruption, regulatory changes, labour/skill shortages, the threat of new entrants and transition to new energy sources are also believed to have a significant impact on business profitability.
Director and Office Managing Partner of PwC Bangladesh Arijit Chakraborti said: “Business leaders in Bangladesh have been investing in transformation programmes for their businesses in the recent past and have acquired new capabilities to help them develop good foresight in visualising the short-to medium term outlook of their own businesses. These transformation programmes have also helped them to develop the resilience to weather any short-term turbulence in their businesses.”
Climate and social impact
Climate change gains prominence as a cause of concern for Bangladesh CEOs with 66% of the CEOs expecting a limited to moderate impact on their cost profiles, 63% on their physical assets and 56% on their supply chains due to climate-related disruption.
However, despite CEO awareness about their business's exposure to climate risks, most of these companies are yet to take satisfactory interventions to mitigate those risks.
Managing Director of Country Clients and Markets Leader of PwC Bangladesh Mamun Rashid said: “CEOs continue to prioritise short-term business growth over the long-term benefits of investing in greener operations. However, in Bangladesh, their near-term priorities are efficiency improvement and technology adoption.”
“With CEOs driving the agenda, we expect climate risk management plans to become more holistic and inclusive, as well as an integral part of business strategies in the future, such as plans for relocation of production facilities from areas that are prone to frequent flooding,” he added.
Interestingly, while global CEOs prioritise business benefits for ecosystem development, their peers in Bangladesh focus more on addressing societal issues.
For example, about 22% of the CEOs responded that they would like to collaborate with the business consortia to address societal issues as opposed to 12.50% who stated that they would do the same to create value for their business.
[PwC surveyed 4,410 CEOs globally in October and November 2022 on a confidential basis. The figures in this report are based on unweighted data from the full sample of Bangladesh CEOs. Furthermore, PwC conducted interviews with CEOs from different industries in Bangladesh to gain a more in-depth understanding of their business and economic outlooks.]