APAC CEOs’ confidence on global economy growth prospect shaken — KPMG
04 Sep 2020
Asia Pacific (APAC) business leaders’ confidence on growth prospects of the global economy over the next three years has dropped, according to the 2020 KPMG Global Chief Executive Officers (CEOs) Outlook report.
The report revealed that only 22 per cent of the CEOs remained confident about the growth prospects of the global economy, a significant drop from 67 per cent in January 2020.
However, the report said the CEOs are much more assured in the resilience of their own business with 63 per cent expressing confidence in their company’s growth for the same period.
KPMG conducted two surveys – one at the onset of the pandemic in January and a second survey in July/August, the first study of its kind, which measures how CEOs’ priorities and concerns have changed during the global pandemic.
The report revealed that business leaders have radically shifted their perspectives by prioritising digital transformation, talent, and environmental, social and governance (ESG) factors as their top agendas while assessing the long-term impact of COVID-19.
KPMG Malaysia managing partner Datuk Johan Idris said a majority of the CEOs have undertaken critical measures to bolster their companies’s medium-term resilience.
“This is particularly evident at the height of the crisis when business leaders worldwide took steps to maintain business-as-usual activities in answer to restricted movements.
“With the extension of the Recovery Movement Control Order (RMCO) until December 31 this year, business leaders are now forced to relook their operational strategies and the key to this is the ability to move away from short-term measures and prepare for mid- and long-term growth,” he commented.
The report revealed that one way CEOs are collectively doing to secure long-term growth is by channelling resources towards digital transformation initiatives.
It said before the pandemic, 64 per cent of the CEOs felt overwhelmed by the lead times required to achieve significant progress on digital transformation.
However, following worldwide lockdowns and the need for physical distancing, 46 per cent of them reported that progress for their digitisation has sharply accelerated, putting them years in advance, with 61 per cent planning to prioritise more capital investment in buying new technology.
“Clearly, there has been a momentous change in mindset in that the CEOs are now more confident and willing to invest in technology to make their companies more operationally resilient, agile and customer-focused to achieve growth during this tumultuous time.
“We expect digital acceleration to increase in speed and scope even after the pandemic subsides,” said Johan.
The report also revealed that among the threats to long-term growth due to the pandemic are talent risk, supply chain risk and return to territorialism and cyber security risks.
The CEOs have identified that talent risk has now risen to be the highest perceived threat to long-term growth which encompasses recruitment/retention, overall wellbeing and health of staff, which were the least concerned about at the beginning of the year.
This reflects the challenges faced with recruiting and retaining personnel while motivating the workforce despite disruption to the usual ways of working, it said.
In addition, the report said the rise in supply chain concerns compared to earlier in the year could be attributed to the fact that over two-thirds of organisations have had to rethink their global supply chain approach given the disruptive impact of the pandemic.
This could potentially lead to a redesign of global supply chains to become more agile in response to changing customer needs, and more robust to reduce risks and disruptions over the long term, it said.
The report also highlighted that the recent developments have also driven 78 per cent of the CEOs in Asia Pacific to develop a stronger emotional connection to their organisation’s purpose, by shifting focus on the ‘social’ component of their ESG programme.
“Recovery from the pandemic does not mean a return to normal, but instead an opportunity to define our post-pandemic reality.
“As the crisis continues to change what good corporate leadership looks like, the role of the CEO is more important than ever in steering the business towards growth in the new reality and beyond,” Johan added.