A PwC survey of CFOs conducted during the week of March 9, 2020, in the U.S. and Mexico reveals 80 percent are concerned the coronavirus global health emergency will lead to a global economic recession. More than half believe the outbreak could have a significant impact on their business operations (54 percent) and will decrease their revenue or profit (58 percent).
This outlook is amplifying the pessimism identified by CEOs in PwC’s 23rd Annual Global CEO Survey. In late 2019, before the first coronavirus cases had been reported, more than half of the CEOs surveyed believed the rate of global GDP growth would decline in 2020. Only 27 percent of CEOs reported feeling “very confident” in their companies’ prospects for revenue growth over the next 12 months — a low not seen since 2009.
Amid record levels of uncertainty, C-suite leaders will be faced with daily — even hourly — decisions about how to manage both the crisis and recovery. To monitor the business and economic impact of coronavirus, PwC will be conducting its COVID-19 CFO Pulse Survey every two weeks, and is expanding it to include CFOs in other territories. We’ll be able to track financial leaders’ perception of events as they unfold, as well as identify emerging priorities and trends.
More than half (54 percent) of respondents believe the coronavirus could have a significant impact on their business operations.
In this first survey, a majority of leaders (90 percent) reported that their business would return to normal within three months if the coronavirus were to end immediately. This finding may result from the fact that many companies have developed contingency plans during the last few years in anticipation of a geopolitical shock and have been able to implement these plans as the crisis unfolds. Those respondents who remained optimistic about resolution of the outbreak say they are focusing on near-term solutions to manage disruptions rather than longer-term solutions with strategic implications. Only 30 percent of companies were considering changes to their supply chains, with many having adopted short-term alternative sourcing strategies during the first quarter.
Of course, in the days since the initial survey, the situation has evolved rapidly. Stock markets have become more volatile, and governments around the world have enacted travel bans, lockdowns, and policy responses. We anticipate a significant increase in the number of companies performing scenario planning and financial modeling for potential impacts as they seek to estimate the effect of the outbreak. More companies are also likely to begin updating strategies and shifting investments in the face of temporary — and potentially permanent — changes in some markets or business models.
Stay tuned for our next set of COVID-19 CFO Pulse Survey findings. In the meantime, you can read more from PwC’s Global Crisis Centre here.