|21 May, 2020

Most firms fear prolonged recession, bankruptcies due to coronavirus - WEF

Business leaders are also worried about an increase in cyberattacks

Image used for illustrative purpose. close up of man hand analyzing stock market chart.

Image used for illustrative purpose. close up of man hand analyzing stock market chart.

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Most companies fear that the world will undergo an economic slump for a longer period and there will be a surge in business bankruptcies and cyberattacks as part of the fallout from the coronavirus pandemic.

The World Economic Forum (WEF) has recently asked 350 of the world’s top risk experts to assess the most likely and most concerning fallout risks from the ongoing crisis over the next 18 months.

About seven in 10 (66.3 percent) of the business leaders think that the most worrisome for their companies is the prolonged recession of the global economy, while 52.7 percent pointed to a surge in bankruptcies as the most worrisome.

Cybersecurity is another concern. About 50.1 percent of the respondents are particularly worried about an increase in cyberattacks against their companies and expect the restrictions on the cross-border movement of people and goods to remain up to 2021.

The findings indicate that, unless world leaders, businesses and policy-makers work together to manage the fallout of the pandemic, economic distress and social discontent will rise over the next year and a half.

“As economies restart, there is an opportunity to embed greater societal equality and sustainability into the recovery, which wold unleash a new era of prosperity,” the report stated.

The (WEF) report was produced in partnership with Marsh & & McLennan and Zurich Insurance Group. Respondents’ feedback showed that the immediate economic fallout from coronavirus dominates companies’ risks perceptions.

John Doyle, president and CEO of Marsh said that governments and the private sector need to work together more effectively to create the conditions for a speedier recovery and a more resilient future.

“Along with major investments to improve health systems, infrastructure and technology, one of the outcomes of this crisis has to beg that societies become more resilient and capable of withstanding future pandemics and other major shocks,” he said.

Other concerns

The protracted disruption of global supply chains is also one of the biggest concerns for companies, cited by 48.4 percent of the respondents, as well as tighter restrictions on the cross-border movement of people and goods (42.9 percent). More than a third (35.4 percent) believe another global outbreak of coronavirus is a major risk for their companies.

The study also found that the “greatest concern” for the world is prolonged recession of the global economy, cited by 58.5 percent of the business leaders, followed by high levels of “structural unemployment” (43.8 percent), another global infectious disease outbreak(40.1 percent) and weakening of fiscal positions in major economies (39.2 percent).

Social anxieties are another concern. According to WEF, widespread anxiety could worsen as a result of joblessness, inter-generational friction and the pressure that fear and isolation have put on mental health.

A study conducted in the United States, for example, revealed that social distancing risks increasing suicide rates. Another study found that 70 percent of adults in the US feel this period has been the most stressful for their careers.

(Writing by Cleofe Maceda; editing by Seban Scaria)

cleofe.Maceda@refinitiv.com

#RECESSION #WEF #CORONAVIRUS #ECONOMY

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© ZAWYA 2020

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