Canadian business leaders almost certain that recession is coming

KPMG poll reveals 92% of CEOs and 66% of SMBs think a recession will occur within 12 months

Canadian business leaders almost certain that recession is coming
Steve Randall

Hiring and digital transformation are on hold for many Canadian businesses as recession fears grow.

A new survey from KPMG reveals that 92% of Canadian CEOs believe there will be a recession within 12 months, although they have a more bullish outlook for the long term.

A separate poll from the firm shows that two thirds of small and medium sized businesses (SMBs) are also expecting a downturn in the next year although 52% believe it will be mild and short.

For large firms, hiring intentions are on hold for 41% while 49% are considering reducing their headcount over the next six months. For SMBs, 30% have frozen hiring with 41% considering downsizing their employee base in the coming months.

Cutting back on digital transformation is also likely, with 37% of CEOs and 25% of SMBs having paused their business transformation strategies to mitigate short-term recession risks and another third of both groups to take similar action in the next six months.

“While it may be tempting for some leaders to ‘slash and burn’ to manage through a recession, they ultimately do so at their own peril,” says Stephanie Terrill, partner and business unit leader, management consulting at KPMG in Canada. “They are counting on both their customers and talent to be waiting for them on the other side of a recession that may never happen.”

Bullish outlook

Despite the downturn expectations, 79% of CEOs are confident that they will ride out the recession.

Almost all (96%) are also very confident or confident in growth for the business over the next three years. Nine in ten SMB also said this.

However, there are concerns around labour and skills shortages, burnout of workforces, another COVID wave, and employee morale.

“While a potential recession throws a curveball, the vast majority of business leaders intend to increase their headcount to help drive their three-year growth plans,” added Terrill. “Worryingly, part of why business leaders are temporarily holding back on their digital transformation investment is, ironically, a shortage of skilled talent and burnout among existing employees.”