CEOs are less concerned, cautiously optimistic for 2024

Confidence in both global and Hungarian economic growth seems to be returning after last year’s spike in pessimism

According to PwC Hungary’s 13th CEO Survey, 54% of Hungarian CEOs are confident about the global economic outlook, while 60% believe Hungarian economic growth will also improve. More than half (58%) of CEOs plan to increase prices and more than a third (36%) anticipate increasing headcount over the next 12 months. Four out of ten believe they need to change their companies’ business models and processes to survive in the long term. Hungarian chief executives expect an exchange rate of 394 forints to the euro, 1.7% GDP growth, and 8% inflation this year.

It is clear from the 297 personal interviews that compared to last year, when pessimism reached one of the highest levels on record, the majority of Hungarian CEOs are now more optimistic: 54% believe the global economy will improve, and 60% expect the same for Hungarian economic growth. Another 22% anticipate a decline in both global and Hungarian economic growth (compared to 76% and 85% respectively last year). For the first time in the history of the survey, Hungarian CEOs are more optimistic about economic growth than about their own revenue prospects. The percentage of those who are confident about their company’s revenue growth in 2024 has fallen to 2012 levels (47%).

Among external threats, inflation remains the top concern for CEOs (51%), followed by skills shortages (48%), macroeconomic volatility (37%), geopolitical conflict (36%), and cyber risks (35%). Compared to 2023, perceived exposure to macroeconomic volatility and geopolitical conflict has declined the most, while concerns about climate change and cyber risks have not changed.

Just as last year, 43% of Hungarian CEOs believe their companies would no longer be viable in ten years’ time if they continued on their current path. Over the past five years, CEOs improved the way their company creates, delivers and captures value by developing novel products or services (54%), adopting new technologies (44%) or developing new technologies in-house (32%), and forming new strategic partnerships (47%).

While two-thirds of CEOs report reallocation of resources (financial and human) between core business activities year to year, most companies have only attempted meaningful transformation in response to changes in customer preferences (55%), technological change (44%), government regulation (48%) or competitor actions (30%).

In this ecosystem, government regulation is two-faced: nearly half (48%) of CEOs say it drives change, while more than one-third (35%) say it hinders change. Other barriers inhibiting transformation include bureaucratic processes in the company (20%), lack of technological capabilities (20%), and limited financial resources (19%).

Generative AI has been adopted by less than a fifth (18%) of companies, and 27% of CEOs say their company has changed its technology strategy because of generative AI. Exceptions include technology, media and entertainment, and telecommunications, where hopes and fears are also above average.

Expectations are much higher regarding the transformative potential of generative AI over the next year: about half of CEOs expect AI to improve product or service quality (52%), enhance their company’s ability to build trust with stakeholders (45%), and increase efficiency at work (56%). Within the next three years, six in ten respondents anticipate generative AI will not only require new skills from their workforce (68%), but will also change the way their company creates, delivers and captures value (60%), and increase competition (63%). Four-fifths of respondents predict generative AI will increase their productivity and efficiency at work (86%), and two-thirds (68%) expect it to improve profitability in the next five years.

Nearly three-quarters (72%) of CEOs say they are concerned about AI-related cyber risk in the short term; and even more (77%) are concerned about it over the next five years. Over half (52%) of CEOs agree that generative AI is likely to increase the spread of misinformation in the next 12 months, while 71% envisage such risk over the next five years. CEOs also expect generative AI to increase legal liabilities and reputational risks: 53% are concerned about this in the next 12 months, and 62% over the next five years.

In the Hungarian survey, CEOs were also asked what they would like to do beyond their usual tasks and what other role they could play in the corporate structure. Four-fifths of Hungarian CEOs want to pay more attention to solving their organisation’s human resources issues (80%), focusing primarily on organisational culture (94%), employer branding (66%), and employee retention (64%). In addition, almost four-fifths (78%) consider it important to improve their own digital skills (three-quarters also of their colleagues), and 62% want to be closer to making technology decisions – they would like greater involvement in organisational matters related to business development (63%) and forming strategic partnerships (56%).