Economic optimism on the rise: KPMG
- March 24, 2021
The CEOs of some of Canada’s biggest publicly traded companies are far more confident in economic growth prospects than they were six months ago, according to KPMG's recent Global CEO Outlook pulse survey.
Their level of confidence in the three-year growth prospects for the Canadian economy has risen to 81 per cent, up sharply from 48 per cent six months ago.
"We have seen tremendous resiliency and ingenuity in the business community throughout this crisis," says Elio Luongo, president and senior partner, KPMG in Canada. "While the economy is not yet back where we need it to be, recent reports on job and GDP growth indicate a full rebound may come earlier than expected. This would especially be good news for the small- and medium-sized enterprise business owners who have been hit the hardest."
While confidence is Canada has grown, some doubts remain about the global economy, where optimism is 20 points lower than at any point since 2017 (42 per cent versus 68 per cent in January 2020).
As for corporate earnings, 86 per cent of Canadian CEOs remain confident in the three-year growth prospects, predicting per annum earnings growth of 2.5 per cent. That's up slightly from 84 per cent six months ago.
A KPMG in Canada poll of over 4,000 Canadians earlier this year revealed that nine in 10 Canadians want the country to adopt a 'Canada-first' mindset to get the economy moving again, including creating incentives to 'buy Canadian' and corporate Canada allocating a share of all their contracts to small- and medium-sized Canadian businesses.
Two in five (43 per cent) CEOs in Canada say the pandemic forever changed their business (22 per cent globally). Many are reconsidering their organization's physical footprint, nearly half embracing flexible workplace options, and nearly two-thirds continuing to build on their use of digital collaboration and communication tools.
Climate concerns mount
Climate change is still top of mind for Canadian CEOs, who identified this as the "greatest threat" to their company's growth prospects over the next three years.
With the risk of territorialism and the potential loss of talent during the pandemic subsiding, Canadian CEOs said the following are the major threats to growth:
- Environmental / climate risk
- Emerging / disruptive technology risk
- Supply chain risk
- Cybersecurity risk
- Interest Rate risk
- Operational risk
- Talent risk
- Tax risk
- Return to territorialism
- 81 per cent of Canadian CEOs say "upgrading the infrastructure around the digital and innovation critical for business continuity" can't be achieved by the action of one company or country alone – it requires public-private partnerships (69 per cent globally).
- Nearly half (48 per cent) of Canadian CEOs said one of the longer-term impacts of the pandemic is that a majority of employees will work remotely between two-to-three days a week (29 per cent globally).
- 62 per cent of Canadian CEOs will continue to build on the use of digital collaboration and communication tools well beyond the pandemic (61 per cent globally).
- 76 per cent of Canadian CEOs will use virtual platforms for customer engagement and queries, such as chat bots, social media, telephone or website (58 per cent globally).