World’s businesses project two-speed recovery from COVID-19

As the world awaits widespread access to Covid-19 vaccines, a new report from HSBC Commercial Banking signals a two-speed economic recovery spanning several years as the pandemic redefines business success.

Drawing on the views of over 10,000 companies in 39 countries and territories, HSBC’s annual Navigator survey finds that 8% are more profitable than they were before the Covid-19 outbreak and 45% expect to return to pre-Covid profitability by the end of 2021. However, 28% and 11% of businesses expect it will take until the end of 2022 and of 2023 respectively just to claw back ground lost during the pandemic, while 6% are looking at 2024 or beyond.

Although the number of companies projecting sales growth in the year ahead (64%) has dropped 15 percentage points from a year ago, and the proportion of zero growth companies has doubled (24%), four in ten (42%) businesses are expecting sales growth of more than 5% in 2021.

A distinguishing feature of these ‘high growth’ companies is that nearly all (89%) are going on the offensive by increasing investment. In contrast, more than half (56%) of the businesses predicting lower sales are planning retrenchment, with four in ten (42%) expecting to reduce investment in their business.

Digital is key to success during the pandemic, with ‘high growth’ companies now making most sales online. 32% of high growth firms expect technology-driven efficiencies to be a key driver for their recovery, more so than businesses with lower or no growth. As a result, nearly half (47%) plan to invest in digital only tools and platforms this year, while a third will be introducing new products and services.

Empowering employees: The workforce is a key priority for high growth firms, with 90% planning to upskill employees and to invest in staff wellbeing.

ESG commitment: The vast majority of companies surveyed (86%), from the optimists to the pessimists, think efforts to boost their sustainability performance will help increase sales. Three in four have set environmental, social and corporate governance (ESG) targets, with the greatest focus on environmental and social goals (up 10 percentage points and 12 percentage points respectively from 2019).