Global CEOs expect recession to be mild and shorter: KPMG survey

Top global CEOs expect the recession to be mild and shorter, according to a survey by KPMG. As per KPMG 2022 CEO Outlook, 86 per cent of CEOs surveyed believe a recession over the next 12 months will happen, but 58 per cent feel it will be mild. The risk of recession has risen in the last few months as central banks across the world are hiking interest rates to contain super-hot inflation caused by a combination of factors such as the pandemic and Russia’s invasion of Ukraine.  

“Nearly nine out of 10 (86 percent) CEOs believe a recession will happen over the next 12 months, but three out of five (58 percent) feel it will be mild and short,” the survey said.  

Most of the top executives are of the opinion that the recession will make the post-pandemic recovery difficult. As per the survey, 73 per cent of CEOs believe the recession will upend anticipated growth over the next three years, and 75 per cent also believe a recession will make post-pandemic recovery harder. 

“71 percent of CEOs predict a recession will impact company earnings by up to 10 per cent over the next 12 months,” the survey stated.

Tata Steel CEO and MD TV Narendran said 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 optimized and resilient supply chains,” he said.

Earlier this week, International Monetary Fund MD Kristalina Georgieva said that the outlook for the global economy was ‘darkening’ due to shocks caused by the pandemic, Russia’s invasion of Ukraine, and climate disasters on all continents, and it could get worse.

Georgieva said the world’s largest economies like the US, Europe, and China were now slowing down, dampening demand for exports from emerging and developing countries. The IMF, she said, will next week downgrade its forecast for 2.9% global growth in 2023.

In a comprehensive new study, the World Bank last month said that as central banks hike interest rates to control inflation, the world may be edging toward a global recession in 2023, and a string of financial crises in emerging markets and developing economies would do them lasting harm. 

The US Fed has already hiked 75 basis points three times in a row, and it is expected to raise the rate by similar points next month. 

World Bank Group President David Malpass recently said that global growth was slowing sharply, “with further slowing likely as more countries fall into recession”.