Global CEOs are confident about prospects of the world economy over the next three years although nine out of 10 are bracing for a recession, according to the KPG 2022 CEO Outlook report
The report said 71 percent of CEOs were confident about the global economy’s growth prospects over the next three years, up from 60 percent in early 2022. Nearly 9 in 10 were confident about their own organisation’s growth over the same timeframe.
The survey drew on the perspectives of 1,325 global CEOs across 11 markets to provide an insight into their three-year outlook on the business and economic landscapes.
The key highlight of the findings was that 85 percent of global CEOs were positive about the growth expectations in 2022; steady from earlier this year and down slightly from 2021 (87 percent).
The respondents still anticipate challenges in the short term. Nearly nine out of 10 (86 percent) CEOs believe a recession will happen over the next 12 months. Three out of five (58 percent) said it will be “mild and short” and 76 percent said they have plans in place to deal with it.
The survey comes amid global financial market turmoil sparked by rising interest rates in advanced and emerging economies to deal with inflation that’s at multi-decadal highs and the Russian invasion of Ukraine that’s sparked supply chain disruptions.
Seventy-three percent of CEOs who took part in the KPMG survey also believe a recession will upend anticipated growth over the next three years; 75 percent believe a recession will make post-pandemic recovery harder.
Tweaking risk management strategies
Additionally, pandemic fatigue and economic factors — including the threat of rising interest rates and inflation — top the list of most pressing concerns for CEOs today at 15 percent and 14 percent, respectively.
And, to manoeuvre through the geopolitical risks and financial uncertainty, 81 percent of CEOs have adjusted or plan to adjust their risk management procedures considering geopolitical risk, and 21 percent of CEOs will be increasing measures to adapt to geopolitical issues to achieve their growth objectives.
“The pandemic and the events in Europe have shown us how interconnected we are as a world. To me, geopolitical issues are the number one risk. I think we all need to build optimised and resilient supply chains,” said TV Narendran Chief Executive Officer (CEO) and Managing Director (MD) of Tata Steel.
Narendran also added that there were opportunities to rethink business and operating models, as well as build the green infrastructure.
Apart from readjusting their business due to global disruptions, attracting and retaining talent is a top operational priority for CEOs.
Two-thirds of CEOs (71 percent) agree the ability to retain talent with the pressures of inflation/rising cost of living is top of mind, as are the long-term impact to organizations from the pandemic and geopolitical tensions.
Nonetheless, with the looming recession, there’s a significant short-term emphasis on hiring freezes and headcount reductions; 39 percent of CEOs have already implemented a hiring freeze, and 46 percent are considering downsizing their workforce over the next six months.
Be that as it may, in the longer term, 79 percent expect their organization’s headcount to increase over the next 3 years, and CEOs are still investing in their existing workforce.
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