While almost 90% of CEOs across the world expect a global recession in the next 12 months, only 28% of South African CEOs expect a similar economic contraction locally, according to a new survey among company bosses.
KPMG interviewed more than 1 300 CEOs worldwide, and found that 86% expected an international recession, which would see global GDP shrink. This is due to an inflation shock, triggered in part by rocketing fuel and food prices following the invasion of Ukraine and by indulgent monetary policies over many years. In addition, a zero-Covid policy in China has resulted in extended lockdowns, hurting global growth.
Some 36% of CEOs in South Africa have already implemented hiring freezes, which is also in line with their global counterparts, where 39% of CEOs globally aren't hiring right now.
Furthermore, 42% of local executives are considering downsizing their staff over the next six months. However, 70% of South African CEOs expect to increase their headcount by up to 10% in the next three years.
Business Leadership South Africa CEO Busi Mavuso pointed out that South Africa will enter a global recession "on an extremely weak footing". Unemployment and poverty have accelerated since the start of the Covid-19 pandemic.
So, even though 71% of global CEOs are confident that once the recession passes, the global economic prospects will look better in the next three years, Mavuso believes that South Africa will remain fighting the low-growth demon for longer.
"Grappling with many structural constraints, including insufficient energy supply and inefficient transport and ports systems, SA will struggle to keep up with the global growth anticipated in this survey until the reforms to address the problems are successfully implemented. It is only through economic growth that we can sustainably address our deep social challenges," she wrote in the KPMG survey report.