PwC’s Global CEO Survey: What We Envision for Mexico in 2023
STORY INLINE POST
It’s no secret that around the globe we are facing a challenging macroeconomic outlook this year. The events of the past several years have changed nearly everything about who we are and how we live.
The results of the 26th Global CEO Survey show that 7 out of 10 CEOs around the world believe that global GDP will decrease over the next several months as a consequence of challenges moving forward post-COVID and geopolitical conflicts in Europe and Asia.
This outlook is the least optimistic we have had regarding global economic growth since we began asking this question in the survey more than 10 years ago. The fear of a global economic recession, particularly in the US, is a situation that worries, but does not alarm, Mexican CEOs. According to the data from our survey, 8 out of 10 Mexican CEOs surveyed are optimistic about the growth of their companies’ revenues in 2023.
After talking with CEOs, both locally and internationally, my view is that they are taking advantage of the reconfiguration of the global economy to attract new investment to our country. In the midst of global tensions, knowing how to take advantage of the opportunities that uncertainty offers could represent the recovery of companies and the economy in Mexico.
In fact, Mexico is not only a strategic partner for the US and Canada, but thanks to our commercial and economic integration into North America as well as trade agreements and geolocation, we are also a global partner. After three years of absence, Mexico returns to the Top 10 most relevant countries for generating income worldwide.
An Opportunity for Mexico
In my opinion, we are capitalizing on the investment that has been made in past decades to have a first-rate manufacturing industry and competitive qualified personnel through nearshoring, a form of offshoring where an organization recruits employees from a neighboring country to complete services.
According to figures from the Ministry of Economy (SE), foreign direct investment at the end of November 2022 was just over US$32 billion, the highest figure in the last five years, of which 45% was allocated to new investments.
In fact, 48% and 46% of CEOs in Mexico and globally, respectively, indicated that to mitigate their companies’ exposure to geopolitical conflicts, they would seek to readjust their supply chains, which could reduce operating costs by an average of 23%.
This represents a great opportunity for Mexico and for companies seeking to reduce their risk of operating in Asia and streamline their CAPEX. The arrival of new investments in Mexico is an opportunity to strengthen our competitiveness. CEOs can take advantage of this by reinforcing the capabilities that generate the greatest value and thus deliver not only to their stakeholders, but also to society.
The Next 10 Years Will Be Critical
More than half of Mexican CEOs – compared to 40% of CEOs globally – surveyed, consider that the shortage of skills and/or work, as well as disruptive technology, could impact the profitability of the industry they operate in over the next decade. Faced with this situation, it is critical to carefully evaluate what kind of skills employees will need in the medium and long term, while identifying the technologies that will give companies the ability to operate more agilely.
In fact, 35% of Mexican CEOs surveyed believe that if their company continues on the same path it has been on, the company will not be viable in 10 years’ time. Process automation (83%), deploying technology, for example, cloud services (72%) and training the workforce in strategic areas of the business are key to reconfiguring our companies and driving a transformation that allows us to maintain sustained growth in the coming years.
Geopolitics and the Business Model
The war in Ukraine and growing concerns about geopolitical flashpoints in other parts of the world have caused CEOs to rethink certain aspects of their business models.
Nearly half of survey respondents are integrating a broader range of potential risks into scenario planning and corporate operating models, whether by increasing investments in cybersecurity or data privacy (54% North America versus 38% in Mexico, adjusting for supply chains (43 global versus 43% local), reassessing its presence in the market or expanding into new markets (with a point of difference between Mexico and the USand Canada) or diversifying its offer of products or services (30% versus 24%, respectively).
For CEOs in Mexico and around the world, it is vital to provide employees with the necessary tools to empower them and give them autonomy to drive the transformation of the organization from their areas of expertise.
Here’s what I see as the four most important areas for CEOs in Mexico to focus on:
Seize the moment. Macroeconomic uncertainty generates concern; however, CEOs can transform their company by considering the long-term variables that benefit sustained growth.
Invest in what matters most. Business transformation goes hand in hand with training talent in skills that prepare them for the future and technologies that strengthen the company's capabilities and generate greater value.
Set up the changes. Change is an opportunity that CEOs can take advantage of to redesign strategies and generate revenue in new markets.
Delegate to transform. It is essential that CEOs invest their time in forward-looking strategies to ensure sustained growth over the years and delegate actions that can be resolved in the short term.