Inflation, economic volatility top threats to businesses
Higher inflation, macroeconomic volatility and geopolitical conflict are the top three threats for the business sector in Bangladesh for the next one year, according to the PwC's global CEO survey.
Chief executive officers in Bangladesh feel that they will be most exposed to the three threats in the next 12 months, said the global professional service provider in its survey titled "26th Annual Global CEO Survey 2023".
The CEOs think all three issues are potent enough to compound and reinforce each other.
For instance, the recent geopolitical uncertainties have increased fuel costs in Bangladesh, which in turn increased the cost of electricity while rising inflation pushed up the prices of raw materials.
"Collectively, these issues are impacting the production of export-focused manufacturing factories, thereby increasing the risk of depleting foreign reserves and increasing macroeconomic volatility," said the survey report.
In fact, the picture does not change much for the CEOs' mid-term outlook towards exposure to threats, suggesting a prolonged impact of the three issues, according to the survey.
In October and November, PwC surveyed 4,410 CEOs across 105 countries and territories, including a considerable number of CEOs from Bangladesh.
The CEOs expressed concern as higher inflation, driven by the impacts of the Russia-Ukraine war on the global supply chain, continues to hurt households, while the macro-economy instability persists.
When it comes to the question of medium to long-term threats, Bangladeshi CEOs have highlighted the increasing exposure of their businesses to climate change in the next five years.
Most of the CEOs feel that it's crucial for them to reinvent their businesses to become future-ready.
They also face disconcerting near-term challenges, starting with the local economy, which, nearly 69 per cent think, will see a declining growth during the year ahead.
The CEOs cited multiple challenges to the profitability of their industry over the next 10 years. The most prominent challenge, analogous to that of the global findings of the survey, is the changing customer preferences (69 per cent).
In contrast with their global peers, CEOs in Bangladesh are more concerned about the ongoing global supply chain disruption than regulatory changes due to the country's significant reliance on the import of raw materials as well as strong dependence on exports and remittances.
Technological disruption, regulatory changes, labour or skill shortages, the threat of new entrants and the transition to new energy sources are also believed to have a significant impact on business profitability, said the survey report.
In terms of monetary investments, nearly three-fourths of the CEOs consider workforce upskilling and process automation as priority areas.
With technology being one of the major disruptors to business viability, 66 per cent of the companies are making investments in deploying advanced technologies such as cloud and artificial intelligence. Apart from this, nearly 41 per cent of CEOs expect to invest significantly in adjustments to their supply chains in the next 12 months.
Only 9 per cent of CEOs have forecast investments in the relocation of company operations due to climate risks in the year ahead.