Health and Healthcare Systems

This is what the coronavirus recession could look like, according to global CEOs

A combination picture shows signs on doors of temporarily closed restaurants and shops in central Maastricht after Dutch schools, cafes, restaurants and sport clubs were told to close down as the Netherlands imposed tight restrictions to prevent the spread of the coronavirus disease (COVID-19), Netherlands March 16, 2020.  REUTERS/Francois Lenoir - RC24LF9TSBYT

Coronavirus has caused many businesses to close, but for some, it will mean closing for good. Image: REUTERS/Francois Lenoir

Joe Brock
Journalist , Reuters
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COVID-19

  • A survey, conducted by YPO, has revealed what business leaders think a recession sparked by COVID-19 could look like.
  • 60% believe the recession will be U-shaped, whilst 22% believe it could be a 'double dip' recession.
  • Many fear that their firms won't be able to survive the crisis.

Global business leaders are preparing for a drawn-out U-shaped recession due to the impact of coronavirus and many fear their companies won’t survive the pandemic, a survey of thousands of chief executives showed on Wednesday.

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The pandemic sweeping the world has killed nearly 180,000 people, routed financial markets and could trigger the worst economic meltdown since the 1930s Great Depression.

A nearly deserted 7th Avenue in Times Square is seen near midday in Manhattan during the outbreak of the coronavirus disease (COVID-19) in New York City, New York, U.S., April 7, 2020. REUTERS/Mike Segar - RC2TZF9VOFUF
The virus has devastated American economic activity. Image: REUTERS/Mike Segar

Around 60% of chief executives are preparing for a U-shaped recovery - a long period between recession and an upturn - compared with 22% who predict a double-dip recession, according to an April 15-19 poll of 3,534 chief executives from 109 countries conducted by YPO, a business leadership network.

The survey found that 11% of chief executives see coronavirus as a risk to the survival of their firm, while a further 40% say the pandemic poses a severe threat.

Coronavirus Covid-19 virus infection China Hubei Wuhan contagion spread economics dow jones S&P 500 stock market crash 1929 depression great recession
Around 60% of chief executives are preparing for a U-shaped recovery. Image: Reuters Graphics

“We have not seen a crisis like this for over a hundred years, and some household names will not survive,” said Glenn Keys, Executive Chairman of Aspen Medical, a Sydney-based health services firm and YPO member.

Business leaders in the hospitality and restaurant sectors were the most vulnerable with 41% of executives saying their firms were at risk of not surviving, while 30% in aviation and 19% in wholesale and retail sales feared they may go under, the survey found.

There are some beneficiaries, with 10% of sector-specific retail and wholesale leaders as well as heads of production firms in agriculture, factories, mines and utilities reporting a positive impact to their revenue.

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However, most chief executives expect things to get worse before they get better.

Almost two-thirds of business leaders forecast a negative impact on earnings to continue for more than a year, while a quarter expect their workforce to be down by more than 20% a year from now.

“Across the globe, the mindset of the business leader is clearly that the world has changed in a very short space of time,” said Scott Mordell, YPO’s chief executive.

“We are in unchartered waters, filled with an unprecedented number of pitfalls, that are challenging some businesses’ very existence.”

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