Login
iscover
The firm’s annual global survey paints a gloomy prospect for the next 12 months.
Newsletter
Most CEOs expect recession, plan hiring freeze: KPMG
14 October 2022
•
12 minute read
You’re out of free articles for this month
To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
A hiring freeze and raising prices are key steps planned by large companies as they baton down the hatches in anticipation of a global recession, a KPMG survey of CEOs reveals.
From a sample of more than 1,300 CEOs across 11 countries, 86 per cent expect a downturn over the next year and three-quarters already have plans in place to deal with it.
“Gathering storm clouds over the global economy have had an impact on the normally upbeat view of CEOs,” KPMG’s Australian CEO Andrew Yates said.
“The majority, including those from Australia, see a global downturn, a short and relatively mild recession, in the next six to 12 months.”
The report finds 80 per cent of CEOs are preparing to raise prices in the next six months to cover costs and 81 per cent are adjusting their risk management procedures to cope with geopolitical uncertainties, such as supply chain disruption from the Russian invasion of Ukraine.
More than 70 per cent of survey respondents expect a hit to earnings of at least 10 per cent and three-quarters a recession will make the post-pandemic recovery harder.
==
==
Pandemic fatigue comes in just ahead of economic factors such as inflation and rising interest rates, at the top of the list of concerns.
Despite the talent shortage of the past two years, 39 per cent have put in place a hiring freeze while 80 per cent “have considered or will consider downsizing their employee base in the next six months”.
While they find remote working has “had a positive impact on hiring, collaboration and productivity over the past two years”, two-thirds expect a return to the office to become the norm.
The expectation of a recession, the first in eight years of KPMG’s annual survey, fails to completely erode confidence, with most CEOs having a positive outlook with a return to growth within three years.
Mr Yates said a majority of the 50 CEOs from Australia in the sample agreed with the recessionary forecast, but the local KPMG operation remained optimistic.
“At KPMG, we believe Australia is better placed than most countries, and so the probability of a recession here is lower than elsewhere, but there is still a risk that domestic demand contracts, rather than just grows at a slower pace.
“We have still to see how households respond the high inflation and interest rate environment.
“So far, they have held up better than consumers in other countries, but the full impact of higher mortgage costs has yet to be felt.
“The extent to which businesses foloow through with their captial expendituyre plans and the return of international students and tourists will also be important factors in boosting economic growth.”
Apart from the economy, Australian CEOs nominated COVID fatigue and ongoing restrictions, as well as supply chain and reputational risks as their most immediate problems.
The KPMG 2022 CEO Outlook quizzed 1,325 chief executives during July and August across 11 major markets, including Australia, China, Germany, India and the US. All had annual revenues above US$500 million and represented a range of sectors, from asset management to banking, from infrastructure to technology.
You are not authorised to post comments.
Comments will undergo moderation before they get published.