Most CEOs in India see a coming recession in the next 12 months which can affect their company’s profitability.

Most CEOs in India see a coming recession in the next 12 months which can affect their company’s profitability.

According to a KPMG study, most of the CEOs in India and around the world estimate a “moderate and brief” recession that will have an impact on the profits of their companies. Despite this, they are confident in the ability of the global economy to withstand it for the ensuing six months.

In India, 66% of CEOs predict a recession over the next 12 months, compared to 86% internationally. A recession will derail planned growth, according to 62% of CEOs, compared to 73% globally. Nearly 90% of Indian business leaders estimate a 10% blow to firm earnings.

KPMG 2022 India CEO Perspective, surveyed more than 125 CEOs in India about their plans and outlook. The three most important issues for CEOs are pandemic fatigue, economic factors—including the chance of inflation, rising interest rates, and an impending recession—and reputational risk.

The top three issues on CEOs’ minds at the moment are reputational risk, pandemic fatigue, and economic worries like the potential for rising interest rates, inflation, and a possible recession.

Senior executives in India and around the world have a lot more hope for the future of the international economy in the coming six months.

Whether these challenges are related to the supplier chain, the business ecology, or staff issues, their scale has notably changed. How soon corporate executives adjust to these changes is what matters. CEOs of Indian companies that participated in the study, according to KPMG CEO Yezdi Nagporewalla, appear confident in the durability of their company and appear to have prepared themselves to make the most of the current scenario.

CEOs in India have understood and adjusted to the present needs of the modern workforce due to the soaring rate of change and transformation. It is encouraging to see that CEOs in India are working to improve measurement and governance to have a more strong and open strategy for advancing a long-term ESG agenda, he stated.

The fact that 47% of CEOs in India are considering staff reduction over the next six months, compared to 46% of CEOs globally, and that 33% of Indian CEOs have already implemented a hiring freeze are signs that the Great Resignation may be slowing down due to the current economic turbulence.

However, when taking a larger view, the study says that 79% of CEOs in India and across the globe predict an increase in their company’s personnel over the next three years.

Compared to 72% of CEOs worldwide, 61% of Indian CEOs claim to have an aggressive digital investment plan intended to gain first-mover or fast-follower status. This indicates that the unpredictability is encouraging Indian CEOs to continue emphasizing digital transformation.

According to a recent World Bank analysis, a global recession and a string of financial crises that would irreversibly affect the emerging market and developing economies may be on the horizon in 2023 as central banks around the world concurrently hike interest rates in reaction to inflation.

Over the following three years, CEOs in India predict that geopolitical concerns will continue to have an impact on strategies and supply chains. According to the survey, 75% of CEOs in India and 81% of CEOs worldwide have changed or plan to change their risk management practices to account for geopolitical risk, and 21% of CEOs in India and 20% of CEOs around the world will take more steps to adapt to geopolitical issues to achieve their growth goals.

Are CEOs ready to handle the situation?

According to the survey, CEOs around the world are better prepared now than they were in 2019 or 2020 to handle immediate difficulties while still estimating the development in the long run.

Two out of every five CEOs, according to the report, are ready to lower their margins and rise cost control. A hiring freeze, supply chain diversification, and productivity increases are all strategies that one in three CEOs are ready to use.

Compared to global CEOs who aim to adopt a hiring freeze in the next six months, just 70% of Indian CEOs do so. When it comes to downsizing, the figures rise slightly; 75% of Indian CEOs, as opposed to 80% globally, plan to do so in the next six months.

Compared to their international counterparts, more Indian CEOs are now concentrating on organic development, collaborations, and geopolitical risk management for the next three years. While 78% of Indian CEOs concentrate on these three areas to meet their growth goals, this percentage drops to 68% for CEOs globally.

While most of the CEOs in India and the world have faith in the endurance of their businesses, more Indian CEOs have faith in India’s resilience than in their own.
The survey states that while just 75% of Indian CEOs are confident in the durability of their own companies, 82% of Indian CEOs are positive about India. The situation is different for global CEOs, who have greater confidence in their businesses than in their countries.

Overall, 82% of Indian CEOs and 73% of CEOs around the world are more confident about the world economy than their international counterparts.

edited and proofread by nikita sharma