Energy sector executives concerned about recession, interest rates and inflation

According to the “2022 Global Power Sector CEO Survey” conducted in Turkey, power sector CEOs are concerned about interest rates, inflation and recession.

The results of the survey conducted with the participation of 138 energy CEOs in the fields of oil, gas, power, renewable energy and utilities were published by KPMG Turkey under 4 main headings: economic perspective, technology, talent and ESG (medium environment, social, governance).

87 percent of CEOs expect a recession

According to the survey results, 87 percent of CEOs in the energy sector say a recession may occur in the next 12 months. While 59 percent of CEOs think this recession will be mild and short-lived, 75 percent believe it will reverse expected growth over the next 3 years.

While energy CEOs are bracing for a recession, many are optimistic about the growth prospects for the economy as a whole, the energy sector, and their own companies over the next 3 years.

While 71 percent of CEOs said they were confident or very confident in the growth potential of the global economy, 85 percent said they were confident or very confident in the energy sector and their own organizations.

THEY PLAN TO REDUCE THE NUMBER OF EMPLOYEES

41% of CEOs who took steps to mitigate the effects of the economic downturn say they will diversify their supply chain in the face of supply chain disruptions, while 36% say they plan to do so within 6 months . 49 percent of CEOs say they plan to reduce the number of employees in the next 6 months.

37 percent of CEOs said they have halted their digital transformation, citing geopolitical challenges. 47 percent of them say they will take a break from their digital transformation in the next 6 months.

According to the survey, 75 percent of power and infrastructure CEOs and 80 percent of oil and gas CEOs decided to end their business relations with Russia due to Russia’s ongoing attack on Ukraine. Twenty percent of CEOs surveyed across both industries say managing geopolitical risk is critical to achieving their growth goals over the next 3 years.

INTEREST RISKS, INFLATION AND RESSION IN THE FIRST RANGE

Commenting on the results, KPMG Turkey’s Power & Infrastructure Sector Leader Orhan Turan also made the following assessments:

“When CEOs are asked about the biggest risks that concern them; interest rates, inflation and recession occupy the top three places. In 2020 and 2021, the risk of climate/environmental change was considered the biggest threat to the growth of organizations. In our 2022 survey, climate change was not among the top risks, with only 9% saying it was the most important risk, up from 35% in 2021. This result was another surprising result from our survey” (ANKA)