1 in 3 senior financial officers worried about global recession risks

27% flagged the impact of trade tariffs on their businesses.

A third (30%) of chief financial officers (CFOs) and group treasurers in Asia Pacific flagged the possibility of a global recession as the biggest risk for their business in the next six to 12 months, according to a survey conducted at the latest J.P. Morgan Asia Pacific CFO and Treasurers Forum held in Shanghai, China.

More than 150 respondents from 130 global corporations identified a potential global recession as the top risk to their business, followed by 27% flagging the impact of global trade tariffs on their business, and 24% over an emerging markets slowdown. They also shared concerns over cyber security (10%) and the outcome of Brexit (9%).

On the impact of the ongoing trade tensions and supply disruptions, about 15% of respondents revealed that they are shifting production away from China to other countries. But more (34%) of respondents indicated that they are exploring pricing options with suppliers, whilst 32% currently sourcing alternative suppliers.

Companies also admitted that they are struggling to future-proof their businesses. A quarter of CFOs and treasurers pointed to the inefficient processes and lack of technology as the top two challenges in securing their companies. Almost a quarter (24%) also cited the shortage of people resources as a problem they face in future proofing their organizations,

“Whilst J.P. Morgan’s view is not for a recession, growth is expected to slow in the coming quarters, with global growth for 2019 forecast at 2.7% and dipping to 2.5% in 2020. We still see growth opportunities especially in emerging Asia but the geopolitical events are somewhat clouding sentiment,” said Oliver Brinkmann, head of corporate banking, Asia Pacific, J.P. Morgan.

But the majority of respondents indicated that they are prepared to ride out the growth of e-commerce, with 45% saying that they have an e-commerce strategy in place whilst 21% shared that they are in the midst of planning for it. In terms of challenges they face in employing online transactions, senior managers noted the breadth of collection channels, cybersecurity, incoming reconciliation, and processing chargebacks and disputes.

“Asia Pacific already comprises more than half of the global e-commerce volume and is expected to increase its share to 70% by 2022. Migrating commerce activities onto electronic platforms is no longer an option; it has become inevitable for most businesses,” noted Brinkmann.

Meanwhile, amongst emerging technologies, half the respondents singled out artificial intelligence (AI) as the tech that would play the biggest role disrupting traditional finance, followed by blockchain (28%), cryptocurrencies (15%) and quantum computing (7%).