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Nearly Half of Global CFOs Expect to Lay Off or Furlough Staff

In addition to having far-reaching human health implications, the coronavirus outbreak is dealing a major blow to the world’s economy.

A study released this week by PwC, which tracked sentiment data from more than 150 finance executives from regions across the globe, revealed that the majority of leaders (67 percent) worry the pandemic could throw the global economy into a recession.

Most chief financial officers (CFOs) serving companies based in the U.S. and Mexico (87 percent) said the virus has the potential to significantly impact business operations, and is a current cause for great concern. “Multi-territory” leaders, or those servicing brands in Bahrain, the Netherlands, the Philippines, Portugal, Qatar, Switzerland, Thailand and the United Arab Emirates, responded similarly, with 82 percent saying the outbreak could have a detrimental effect.

Nearly one-third (32 percent) of multi-territory CFOs expect layoffs—double the number (16 percent) expected by execs in the U.S. and Mexico. Half of all respondents (52 percent) said they expect losses in productivity due to a lack of remote work capabilities.

As a result of these projections, financial leaders are reining in their brands’ spending. Nearly two-thirds of U.S. and Mexico-based respondents (64 percent) and more than half of multi-territory respondents (55 percent) said they’re taking measures to mitigate business costs. Sixty-four percent of U.S. and Mexico execs also said they would be deferring or canceling investments, compared with 47 percent of their multi-territory counterparts.

About half (49 percent) of U.S. and Mexico CFOs said they would be adjusting their guidance due to recent developments, while 43 percent of global leaders agreed.

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The majority of execs in both camps expects to see impacts on their workforces over the next month, with around half (52 percent) of multi-territory respondents saying they expect to see drops in productivity due to a lack of remote work capabilities. In the U.S. and Mexico, 60 percent said they anticipated productivity losses, as significant social-distancing measures are already in effect.

More than two-fifths of execs from the U.S. and Mexico, as well as multi-territories (44 percent and 48 percent, respectively) expect changes in staffing like furloughs and layoffs due to the slowdown in demand for products.

The outbreak has thrown a wrench into global supply chains, but CFO sentiment on the issue remains mixed. As China’s production began to get back on track in March, the virus began spreading to other regions, like India, that provide other services.

Almost half (47 percent) of multi-territory finance leaders said they don’t believe their companies need to change up supply chain strategies going forward, while the rest say they are weighing possibilities or deciding whether to respond with supply chain adjustments.

Despite the overwhelming effects of immense market uncertainty, many CFOs are cautiously optimistic about the time it would take for their businesses to recover if they outbreak were to end immediately. Three-quarters (75 percent) of multi-territory respondents said they believed their businesses would return to normal in less than three months, and similar sentiments were shared by execs in the U.S. and Mexico.

One-fifth (21 percent) of multi-territory leaders projected a longer lead time of three months to six months for business as usual to resume.