CFOs forecast recession into 2010 says study

NEW YORK – Senior finance executives across the globe remain pessimistic about the prospects of rapid economic recovery and are aggressively pursuing new ways to control costs, an American Express study showed.

Nearly 70 per cent of respondents in the American Express/CFO Research Global Business & Spending Monitor survey of 285 senior finance executives said they expected to see ‘recovery’ beginning sometime in 2010.
Over two-thirds of respondents predicted modest to substantial economic contraction over the next 12 months, and 63 per cent reported that their companies’ capital investments will decrease in 2009.
When asked about changes in their workforce, 59 per cent of respondents anticipated a decrease in headcount.
But companies are also taking actions now to avoid layoffs. Half the executives polled reported plans to freeze salaries and bonuses, while 32 per cent plan to reduce benefits and 29 per cent plan to cut salaries and bonuses.
Twenty-four per cent plan to reduce employee work hours or give furloughs and 16 per cent plan temporary office or plant closures, according to the survey, which was released on Tuesday.
The survey also shows that given the world economic slowdown and expectations of a lasting recession, companies are exploring new ways to measure success.
The majority of respondents reported using or considering new metrics for financial performance, operational efficiency and cash flow/capital spending. And 70 per cent of participants said their companies had adopted a formal programme to improve employees’ understanding of their contribution to business performance.
The American Express/CFO Research Global Business & Spending Monitor was completed in April and polled finance executives from the United States, Europe, Canada, Mexico, Asia, and Australia. Company revenues ranged from US$500 million to more than USA$20 billion.
– Nampa-Reuters