86% CEOs believe there would be a recession in 12 months

According to KPMG 2022 CEO Outlook published by international accounting organization KPMG on Tuesday, 86 percent of chief executive officers in the world believe that there would be a recession in the global economy within the next 12 months.

KPMG 2022 CEO Outlook which surveyed 1,325 CEOs between July 12 and August 24, 2022, clearly indicates that the business world expects a global recession as part of the recent economic turmoil caused by the Russian war in Ukraine. Russian special military operation in Ukraine and the western sanctions on Russia had caused widespread inflation in major economies.

Even though a large majority of CEOs feel that a recession is bound to happen in the next 12 months, 56 percent of them believe that the recession would be mild and for a short period. Several analysts have had a similar opinion that the world is going to face a mild recession for a very short period.

The sudden increase in prices of oil in the international market and global supply chain crisis as part of the COVID-19 pandemic doubled down on both developed and developing economies in the form of high inflation rates. European economies such as Germany and Netherlands witnessed historically high levels of inflation while the United States of America recorded the highest inflation in 40 years.

To counter the effects of inflation on national economies and to bring down the inflation rate to normal, central banks across the globe were forced to increase interest rates in an unprecedented manner. When the central bank of a country increases its interest rate, it will reduce cash flow in the economy and bring down demands and hence prices of commodities in the market. But increasing interest rates also may cause economic disruption and push economies into a recession which is a slowdown in the economy. The inability of central banks to bring down high inflation rates through interest rate hikes forced them to increase interest rates more aggressively.

The survey conducted by KPMG also states that 75% of company heads have already implemented or plan to implement a hiring freeze in the next 6 months. More than 80% of CEOs are considering downsizing their employee base by a large number. This indicates that we can expect a large number of lay-offs and terminations in the weeks to come which will mount pressure on labor markets.

Regarding the risks to growth over the next 3 years, the number one risk stated by CEOs was disruptive and emerging technologies which seriously change the landscape of each market and the competition levels. Environmental crisis and climate change also got into the top five risks to the growth of businesses in the next 3 years.



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