Global bosses predict U-shaped coronavirus recovery
Global business leaders have predicted economies will fail to post a quick recovery bounce back quickly from the coronavirus crash.
Many CEOs worry their firms could cease trading altogether, according to a new survey.
Roughly 60 per cent of bosses surveyed by business network YPO said they expect a ‘U-shaped’ coronavirus recovery that features a relatively long period of subdued activity.
International organisations, governments and the private sector have made increasingly dire predictions about the damage coronavirus will wreak on the global economy.
The International Monetary Fund, for example, has said global GDP will drop by three per cent this year in the worst crash since the 1930s.
However, groups have been divided about whether economies will see a quick ‘V-shaped’ recovery or a more prolonged recession in a ‘U-shaped’ recovery. Others have worried the recovery will be ‘W-shaped’ with a so-called double-dip recession.
The YPO poll found that 22 per cent of company bosses predict a double-dip recovery. The business leadership surveyed 3,534 chief executives from 109 countries between 15 and 19 April.
Slightly more than 10 per cent of bosses said they thought coronavirus could well spell the end for their company. Meanwhile, 40 per cent said the outbreak was a severe threat.
“We have not seen a crisis like this for over a hundred years, and some household names will not survive,” said Glenn Keys, YPO member and chairman of Sydney-based health firm Aspen Medical.
The report comes against a backdrop of market optimism, however. US and European stocks have in many cases risen more than 20 per cent since the initial coronavirus crash in February and March.
Investors have taken heart in unprecedented central bank support. Signs that the spread of coronavirus is slowing and steps towards reopening economies have also lifted spirits.
Yet the YPO poll suggested that markets may be getting ahead of themselves. Roughly two-thirds of business leaders said the negative impact of coronavirus on earnings will continue for more than a year.
Around a quarter expect their workforce to be down by more than 20 per cent a year from now.