The majority of executives think it will take longer than a year for their firms to bounce back from the coronavirus crash, a report has said.
Bosses are also deeply pessimistic about the prospects of the global economy. They are slightly less pessimistic about their own companies and industries, however.
The report, from the Economist Intelligence Unit (EIU), came a day after survey data showed that Europe’s economies had crashed in April as service sectors all but imploded.
The International Monetary Fund (IMF) has said coronavirus will cause the worst economic performance in 2020 since the 1930s. Analysts are deeply divided about whether the economy can expect to rebound strongly in 2021, however.
The EIU report, based on a survey of executives, today found that 40 per cent of bosses think a recovery for their firms will take “less than a year”.
However, 46 per cent of bosses think a meaningful recovery will take between one and two years. Meanwhile, 10 per cent think it will take between three and five years. “The former seems realistic, the latter disastrous,” the report’s authors said.
Markets have rebounded in recent weeks amid signs that the virus is slowing. Sentiment has been helped by tentative steps by some governments to “reopen” economies.
“For both basic humanitarian and cynical political reasons, leaders around the world are pressing to re-open closed societies, the WHO’s counsel to stay the course notwithstanding,” the EIU report said.
“But the world is not going to suddenly spring back and continue as though nothing has happened.”
The EIU’s business barometer also showed that executives are deeply pessimistic about the health of the global economy.
On a scale of minus 50 (much worse) to 50 (much better), the reading for the direction of the global economy for the next three months was minus 39.2.
However, that reading was much improved when it came to their views on the health of their own industries and firms, although it was still in negative territory. At the industry level, the barometer stood at minus 22 and minus 17.8 for individual firms.
The EIU report said: “Executives may feel they can exert more influence on the fate of their company and industry than on the economy, making them less pessimistic.”
It also suggested they “may be experiencing a kind of short- term cognitive dissonance brought on by the pandemic”.