A survey of over 3,5000 CEOs in 109 countries has revealed that bosses around the world anticipate a U-shaped recession as a result of the Covid-19 pandemic.
There has talk in recent weeks of a rapid V-shaped recovery, with the world economy rebounding quickly after lockdowns and people return to work.
However, according to the survey conducted by the business leadership network Young Presidents’ Association (YPO): “Around 60 per cent of chief executives are preparing for a U-shaped recovery – a long period between recession and an upturn – compared with 22 per cent who predict a double-dip recession.”
Almost two thirds of CEOs surveyed between April 15 and 19 expected earnings to be impacted for more than 12 months.
Redundancies around the world have surged as the novel coronavirus has spread. China’s urban unemployment stands at just under 6 per cent, 22 million Americans have been laid off in the past month and European unemployment is predicted to double.
As the current downturn was triggered by a freak externality, it was widely hoped that employment rates would recover quicker than in other recessions. However, there is growing concern that the widespread “furlough” schemes implemented by governments to safeguard workers has only delayed further redundancies.
With 25 per cent of the CEOs surveyed expecting their workforce to have shrunk by more than 20 per cent in 12 months, hopes for a rapid recovery in the job market are beginning to wane.
More shockingly 11 per cent of those polled identified the pandemic as a risk to the survival of their company. A further 40 per cent stated that the coronavirus outbreak poses a severe threat. Bosses from the hospitality, restaurant, aviation and retail sectors were the most fearful.
Glenn Keys, the chairman of Aspen Medical, a Sydney-based health firm, and YPO member, stated: “We have not seen a crisis like this for over a hundred years, and some household names will not survive.”