More than 60% of CEOs and other top managers of companies around the world are afraid of a recession in their countries in the next 12-18 months, according to a survey conducted by the research company Conference Board.
Another 15% of respondents believe that their economies have already entered a recession.
The survey shows a sharp deterioration in sentiment among CEOs around the world. At the end of 2021, only 22% of respondents in a similar study noted recession risks, at the end of 2020 – 39%.
As part of the study, the Conference Board interviewed 750 directors of companies from different countries. The survey was conducted in May, that is, before the recent increase in the Fed’s rate by 75 basis points at once.
Top managers named the consequences of the war unleashed by Russia in Ukraine, problems in supply chains and the situation with coronavirus in China, as well as rising interest rates, as the main negative factors.
In addition, directors are concerned about rising energy prices, causing an increase in the cost of transport services.
“Fundamental economic factors such as rising energy prices and the implications for the cost of goods and transportation services are very important,” said George Oliver, chief executive officer of diversified industrial corporation Johnson Controls.
On fears of a recession, some companies have announced a suspension of hiring new employees or even layoffs.
“There is reason to believe that we are entering a recession phase after a 10-year period of economic growth,” Brian Armstrong, head of crypto exchange operator Coinbase, wrote in a letter to employees. “The recession means another winter in the cryptocurrency market, which may turn out to be long.”
Earlier, Coinbase announced plans to lay off 18% of the state, or about 1.1 thousand employees.
At the same time, companies in the United States are also facing another difficulty – a shortage of qualified personnel. This is facilitated by very low unemployment, which reached 3.6% in March.
Meanwhile, consumer confidence remains strong, said Conference Board senior economist Dana Peterson.
“Consumers are less worried about a recession than CEOs,” Peterson said. “But CEOs are trained to look at a 12 to 18-month horizon, and for most consumers, the horizon is three to six months.”
President of Ukraine Volodymyr Zelensky called on leading managers of international companies to create jobs in Ukraine.
“I would very much like, as the President of Ukraine, that your companies consider the possibility of entering and finding their place in the Ukrainian economy. For us, these are, first of all, jobs. You understand that these are big challenges for 12 million people who have lost because of this bloody war of their homes, they left them, lost their jobs, their children lost schools, and Ukraine lost subjects that create a state, who are real citizens, pay taxes, etc.,” Zelensky said, speaking to attendees at the Yale SEO Summit on Wednesday.
“Jobs are very important. The jobs that companies like yours can offer by investing in our economy. This is an important step,” he added.
According to the head of state, it is also important that international companies invest in opening their offices in Ukraine.
“So that you find for yourself those layers of business that you are ready to find: from digitalization to energy. We are ready to talk about everything. But we are not ready to create a minimum tax system. You must understand us: we are talking about the restoration of Ukraine, which means that we should do it on finances. Comfortable conditions – yes, transparent conditions – yes, quick management regarding the start of your business in Ukraine – yes. This is support when all this is beneficial for both you and us,” the president said.
Heads of large industrial companies in Ukraine, which generate a quarter of foreign exchange earnings in the country, have summed up the outcomes of 2021 and determined plans for 2022.
Yuriy Ryzhenkov, CEO of Metinvest Group, said that 2021 was a special year for the company, full of events and challenges, worries and victories.
“In the 15th anniversary year of Metinvest, we have been intensively developing and creating new meanings. By joint efforts of our employees, we have achieved excellent performance in operational improvements. The favorable market situation has made it possible to obtain good financial results in order to invest in upgrading the capacities of our enterprises and social projects,” the top manager said in his congratulations on Facebook.
According to him, in 2021 the company invested record funds in modernization. It began the most ambitious project in its history, worth more than $1 billion – the construction of a cold rolling mill at Illich Steel, took the first important steps towards decarbonization, and successfully resisted the coronavirus pandemic, supplying oxygen to hospitals at the most difficult time for Ukraine.
“We have strengthened vertical integration: we acquired the assets of Dniprovsky Integrated Iron & Steel Works, consolidated the enterprises of Pokrovske Coal Group. We launched new paths of cyclical-flow technology at Inhulets and Pivnichny Minings, a plasma cutting line at the Italian Trametal plant and started construction of the Technical University Metinvest Polytechnic – a project that will bring the quality of Ukrainian higher education to a new, European level and will become a visiting card not only for Mariupol, but for entire Ukraine,” Ryzhenkov said.
In turn, Director General of Zaporizhstal Oleksandr Myronenko pointed to the eco-modernization of the metallurgical plant over the past ten years: the reconstructed gas cleaning systems of a sinter plant and blast furnaces are efficiently operating.
“There is definitely a reason to call the plant’s environmental transformation case successful: by channeling about UAH 16 billion of green investments into the modernization of Zaporizhstal, we have achieved a reduction in emissions of pollutants into the atmosphere at operating production units by 15,000 tonnes per year,” the CEO said, adding that by the middle of 2022 a new modern aspiration unit for updated blast furnace No. 5 will be put into operation.
Director General of ArcelorMittal Kryvyi Rih Mauro Longobardo said that 2021 was a very difficult year. “After difficult 2020, when the COVID pandemic began, we needed to quickly recover and capitalize on the huge market demand for our products.”
“And we did it! Colossal production volumes, record deliveries… We had setbacks and gains, challenges and victories, tears and triumphs. But we showed: we are really made of steel. We were strong, but flexible, we kept good traditions, but introduced innovations, we were smart and inventive,” the CEO said.
According to him, the enterprise is ready for any challenges, while admitting that “it will not be easy.”
Dmytro Kolesnikov, Director General of Zaporizhia Iron Ore Plant, said that 2021 was a rich and fruitful year for the plant: “The enterprise not only consistently fulfilled its plans, but also invested in modernization, development and social projects in the territory of its presence.”
Serhiy Novak, Board Chairman of Kryvyi Rih Iron Ore Plant, assessed 2021 as “difficult”: “The year of overcoming difficulties, hard work and responsible decisions. We introduced new technologies into production, improved qualifications, and modernized expensive equipment. Together we implemented a number of initiatives to improve efficiency, had a much deeper understanding of the needs of our key customers.”
“What the year 2022 will be depends on each of us. Therefore, first of all, I want to wish everyone faith in themselves and their strengths, their professionalism and invaluable experience. May the New Year become for us the year of realizing ourselves, our talents and skills, bold decisions, and a discovery of new horizons,” he said.
Valeriy Yakovenko, Director General of the largest Ukrainian coking coal producer, PrJSC Pokrovske Coal, announced an intention to increase coal production by 12.3% in 2022 compared to 2021, to 7 million tonnes.
