Companies fear protracted slump: WEF

LONDON: A prolonged global slump and surge in bankruptcies arising from the coronavirus pandemic are the foremost concerns for companies surveyed in a World Economic Forum report yesterday.

Recessions on a scale not seen since the 1930s Great Depression demand more action from governments to ensure a timely recovery and to put growth on a healthier path, the report also said. The survey of 347 company risk managers looked at the biggest concerns for the next 18 months, after the pandemic shuttered large swathes of production and forced massive rescue packages by governments around the world.

They identified the most likely fallout as an extended downturn, a jump in company failures allied with industry consolidation, along with high youth unemployment. The debt accrued in the rescue packages could depress government and corporate finances and retard growth for years, and also stymie efforts to combat climate change, the report said.

The crisis has “revealed the inadequacies of the past”, Saadia Zahidi, managing director of the World Economic Forum, said. “We now have a unique opportunity to use this crisis to do things differently and build back better economies that are more sustainable, resilient and inclusive,” she said. The WEF organizes an annual meeting of political and corporate leaders in Davos, Switzerland.

Ahead of this year’s conclave in January, when the COVID-19 outbreak was still largely confined to China, the forum’s annual risk report showed climate change as the biggest concern for companies over the next 10 years. But it also flagged up anxiety that health systems around the world were ill-prepared for another pandemic.

A second wave of COVID-19 was another concern identified in yesterday’s report, along with the dangers of cyberattacks and data fraud as much corporate activity shifts online.