Recession, but “soft and short”. The vast majority of CEOs of Spanish companies, specifically 96%, predict that there will be an economic recession in the next 12 months (recession of growth), although 64% believe that it will be soft and short-lived, as reported KPMG CEO Outlook 2022in which 1,325 CEOs from around the world have participated belonging to companies with a turnover of more than 500 million dollars, 50 of them Spanish.
In the case of Spain, 86% of respondents indicate that a new recession would make it difficult recovery after the pandemic and one in five (22%) estimate that their income would be reduced by at least 10% in this scenario. These predictions carry over to work: 52% have frozen hiring, 48% have considered reducing their workforce and 38% plan to do so in the next six months .
These forecasts come shortly after the Spanish Government lowered its growth forecast for next year by six tenths, to 2.1%, while the Bank of Spain or the International Monetary Fund have lowered it to 1.4% and 1.2%, respectively.
Anyway, the forecasts of the companies are optimistic for the medium term : 98% of Spanish CEOs trust the growth of the national economy and that of their organizations in the next three years and three out of four (72%) anticipate that the number of workers in their organization will increase by this period
The president of KPMG in Spain, Juanjo Cano highlights that “Spanish CEOs show a cautious attitude about the evolution of the economy in the coming months and are swiftly adopting measures to protect their organizations in a uncertain and volatile environment like the current one ” , as the IMF has warned.
The top manager of the consulting firm emphasizes that senior executives “trust in the good economic evolution in the medium term, so they orient corporate agendas to continue to advance in the transformation of their organizations in the coming years putting special focus on the digital transformation and the value proposition to the employee ”.
Regarding the measures adopted by the first Spanish executives to face the immediate challenges, 70% have redefined the price policy to reflect the increase in costs, 58% have promoted solutions for increase productivity and 54% has relocated operations , reduced its profit margin or diversified its supply chain .
supply chain
And it is that the supply chain it is positioned as the aspect of corporate management that generates concern among a greater percentage of Spanish CEOs: one in five respondents (20%) point to it as their main concern.
Short-term forecasts are also forcing us to redefine them strategies of digitization, although the impact is more measured in our country than in all the countries analyzed. While globally 77% of CEOs have paralyzed their strategy of digital transformation or will do so in the next six months, in Spain the percentage is 58%. In fact, for one in four CEOs surveyed in Spain (24%), advancing digital transformation and connectivity between businesses is the top operational priority to achieve their growth goals in the next three years.
In this area, geopolitical uncertainty has increased the relevance of cyber security on corporate agendas. Two out of three Spanish CEOs (68%) say that in their organization there is more concern about a possible cyberattack . It should be noted that the percentage of top executives who consider that their organization is not sufficiently prepared for this type of threat increases by 18 points in our country to reach 30% compared to 2021.
Along with digitization, the most prominent priority for Spanish CEOs to achieve their growth goals is the value proposition to the employee : also indicated by 24% of respondents. The challenges of the global economy also affect strategies to attract and retain talent: three out of four Spanish CEOs (76%) are concerned about the impact of the inflationary environment and the increase in the cost of living on loyalty of talent
One of the aspects that is acquiring increasing relevance is the company’s exercise in the field of social responsibility. 52% of Spanish CEOs say that ESG programs contribute to improving the company’s financial results, two percentage points more than last year. An even greater growth is experienced by the percentage of top executives who perceive that interest groups have significantly increased their demands for information and transparency about the ESG activity of their organizations: in Spain it goes from 58% in 2021 to 74 % in this edition.
However, in the face of a possible recession, Spanish CEOs are also reevaluating their ESG strategies, just as they are doing in other corporate areas: 48% of Spanish CEOs have paralyzed or reconsidered their plans in this subject and 46% expect to do so in the next six months.