Executives and economists anticipate recession at the start of Davos

Of the 4,410 business leaders surveyed by PricewaterhouseCoopers LLP in October and November of last year, 73% predicted that global growth would slow in the next 12 months. The reading was the worst since the consultancy began running surveys in 2011. Two in five even expressed concern that their companies won’t last a decade.

Another survey of chief economists, published by the Forum, found that two-thirds foresee a global recession in 2023 as companies cut costs; 18% considered “extremely likely” such a recession.

Worries are likely to abound this week, when more than 2,700 executives, bankers and economists will arrive at the Swiss ski resort of Davos for the first time in January since 2020. While recent data has raised hopes that economies can still achieve A soft landing, last year’s spike in inflation and subsequent interest rate hikes by central banks have many bracing for a contraction in economies.

PWC global president Bob Moritz said, however, that the level of concern in his company’s survey was likely overstated.

Slowdown expectations are incorporated into predictions because people have seen them coming for a long time. Compared to the 2008 financial crisis, bosses are now more fearful for the economy, but more confident that their companies “will get through this recession”.

Still, business leaders’ confidence in their own company’s growth prospects posted the biggest decline since the 2008 crisis.

adapt or die

The three big risks this year are inflation, macroeconomic volatility and geopolitical conflicts, according to the survey.

PWC’s Moritz said the biggest surprise has been the long-term outlook, with 40% of CEOs convinced that “their organizations will not be economically viable in 10 years if they do not transform”.

And he added: “In the short term it is about how to manage cost pressures and in the long term it is about supply chains, weather and technological disruption.” Managers must act now to “survive two years and thrive in the next ten.””, ensuring that they have the necessary capital for the future.

Last year, managers were concerned about cyber, health, and weather threats. Moritz stated that the climate crisis remains an urgent problem. “I’m not worried that it’s gone down the charts. Things are relative: 60-70% of CEOs are already taking action“, he pointed.

Geopolitical threats are not limited to Russia and China. “If Russia-Ukraine can happen, what else?”. Moritz asked. “What about the Middle East and the role of Iran? Even the US Inflation Reduction Act is a potential risk”. The hundreds of billions of dollars in subsidies from the IRA, as the law is known in English, for clean energy projects is causing geopolitical tensions in Europe.

worker power

When it comes to staffing, 60% of managers do not plan to reduce headcount and 80% will not lower compensation, preferring to retain employees rather than undergo costly recruitment processes. Staff turnover is expected to be high again this year.

“Power remains with workers with the right skillsMoritz said.

Business leaders in France, Germany and the UK are even less optimistic about domestic growth than they are about global expansion.

However, the UK has improved as a place of choice for doing business, with managers ranking it as the third most important country for revenue growth, behind the US and China and tied with Germany. He had never held a position higher than fourth before.