Company executives worldwide are reacting with relief and optimism to having survived the economic fallout of the COVID-19 pandemic, which for many businesses represented an existential threat.

The dramatic changes to fundamental aspects of business are now increasingly underpinned by strategic reviews that shift companies out of their defensive mode into a more proactive outlook, according to EY’s Global Capital Confidence Barometer.

In the survey of 2,400 company leaders, most executives expect revenues to return to pre-pandemic levels this year, and profits to follow next year.

Most managers believe their companies performed well in 2020, but more in the context of surviving than thriving. They were particularly pleased with their transition to become digitally-enabled businesses, as well as their operational stability and risk response, whereas workforce management, customer engagement and, of course, financial performance proved to be more challenging.

In response, most companies will make increased investments in these latter three areas with a greater focus on a flexible cost base, the survey found.

- Advertisement -

However, the vast majority of companies plan to continue their investments into the digital transformation that some started more out of necessity than strategic vision last year.

This includes investments in technologies that accelerate the “digitisation of the customer journey” and the transformation of business processes. This is mainly because lockdowns and border closures exposed fundamental challenges in getting products and services to customers.

“The COVID-19 outbreak shook our communities and businesses to their core,” said Keiran Hutchison, EY Cayman partner and the consulting firm’s regional strategy and transactions leader. “While risks and uncertainty still remain, it’s promising that [company executives have] a more optimistic view of the year ahead and is acting proactively and strategically to reframe their future.”

Most executives (86%) said they took the pandemic as a starting point for a strategic review, mainly because of the existential threat that it posed to their businesses.

As these reviews continue, managers are trying to determine which pandemic-induced changes are temporary and which are permanent.

Despite the positive news about vaccine deployment, survey respondents maintain that the pandemic and the continuing restrictions on economic activity remain their primary risk.

How robust the recovery will be is another area of concern. With economic activity dependent on the speed of the vaccine rollout, an uneven distribution of vaccines at a varying pace globally poses the risk of a growing fragmentation of the world economy, both in terms of markets and sectors.

The potential for mergers and acquisitions has also been reframed by the pandemic. Despite the favourable conditions for M&A such as low interest rates, accommodative capital markets and abundant private capital, fewer companies (49%) are considering near-term deals than last year (56%).

Those that do are now more inclined to evaluate a target’s business resilience and digital strategy than in the past.

Hutchison said, “Notwithstanding the challenges of the last year, the financial services jurisdictions in the Caribbean have all continued to see opportunities in global financial services and whilst the next 12 months will almost certainly see restructuring and capital recycling in the local leisure and hospitality sector, we expect that the mobility of global capital will bring new players and opportunities to all our regional jurisdictions.”

- Advertisement -

Support local journalism. Subscribe to the all-access pass for the Cayman Compass.

Subscribe now