Amid ongoing uncertainty across the macro and geopolitical landscape, we again convened our virtual CEO roundtable, where CEO participants from several industries discussed a range of topics that are top of mind for boards and the C-suite, including managing through inflation and recession, energy, digital and much more.
While the mood among this group when it last met in July 2022 was broadly one of concern around rising interest rates and a possible recession, a sense of hope about what’s to come emerged during our February 2023 gathering. Collectively, the CEOs’ outlook for 2023 is informed by the economic slowdown, inflation and mixed data on the economy. As such, roundtable attendees also shared insights into how they’re staying the course in today’s often volatile business environment.
Economic outlook
EY-Parthenon Chief Economist Gregory Daco kicked off the roundtable with an overview of the economic outlook in four key areas:
- Global growth dynamics. Given today’s elevated inflation and the rapid tightening of global monetary policy, we are in the midst of an economic slowdown. But we’re also seeing positive developments across the globe, including accelerating growth in China and India, easing fears around the energy supply in Europe and labor market resiliency in the US.
- Inflation. Inflation has declined from its 9% peak in June 2022 to about 6.4% in January 2023 and likely will continue to fall into 2024 due to slowed economic activity, rapid tightening from the Fed and easing supply chains. However, it may ultimately stabilize above the Fed’s target of 2%.
- Wage growth. As wage growth moderates and becomes less broad-based, more compression is expected in the months ahead as the labor market rebalances. Despite this, cost pressures continue in this tight labor market, with unemployment in the US at 3.4% (a 53-year low).
- Monetary policy and interest rates. With rate cuts from the Fed unlikely in the near term and additional rate increases on the horizon, this historically rapid tightening cycle is expected to continue. One area to watch: the Fed’s focus on quickly evolving economic data in this volatile economic environment may be risky.
CEO insights
Fresh from the World Economic Forum’s annual meeting in January 2023, EY Global Chairman and CEO Carmine Di Sibio then summarized a few of the key themes he’s discussed recently with other CEOs and at Davos, including inflation and the slowdown in economic growth, the geopolitical landscape (e.g., China, Ukraine), supply chain, talent, and AI and digitalization. “I will tell you, from what we’re seeing in terms of our clients, many of [them] are taking this time to really look at where they need to be in the future,” he noted.
With that, the conversation opened up to the group to explore the key opportunities and challenges that participants and their industries are facing. Below are three key insights from the topics prioritized for discussion by the CEOs in attendance.