At a Fortune gathering here this week, chief executive officers of large global companies and some of their top advisers expressed grave concerns about the state of the world economy, and are preparing for at least a couple hard years ahead.
"For the last 3 ½ to 4 months I've been asking people to operate as if we were going into a recession," said Ian Livingston, CEO of BT (BT), the telecom company that ranks 116 on the Fortune Global 500 listing of the world's largest corporations. "I wasn't anticipating things would be as bad as they are."
Livingston, whose company provides phone, video and broadband services, says the company certainly will feel an impact from a sustained economic downturn: If people don't have jobs, they will spend less on communications services.
Same with smaller companies: no credit means businesses don't expand, which translates into fewer data and phone services for BT to sell. Livingston is even guarded when he talks about BT's bright spot, sales to corporate customers.
Though BT last quarter said orders from big customers remain strong, "if big companies get hit hard they will pull back," he acknowledged.
Sector by sector tsunamiLivingston's cautious view is echoed by dozens of CEOs interviewed by Steve Tappin, a managing partner in executive search firm Heidrick & Struggles' global CEO practice and author of The Secrets of CEOs.
Tappin says the chief executives he spoke with after the credit crisis materialized (but before the banking system really started to break down) were preparing for battle.
"There's a tsunami that's gone through sector by sector," Tappin said. "Many CEOs think this is going to be a multiyear downturn."
Some are expecting two to three years of hard times while others tell him "this is something we're not going to see again in our careers."
Even executives from still-growing emerging markets are uncharacteristically muted in their remarks on the global scene.
Girish Paranjpe, co-CEO of outsourcing giant Wipro (WIT), says growth in countries like India, China and Brazil can't for slowdowns in mature markets.
The emerging economies "will mitigate" the pain, he said. "I don't think they will offset it." For Paranjpe, who used to run the Wipro division that serves financial-services customers, the breakdown of the banking sector has hit particularly close to home. "I know many of the executives personally," he said, "and some of them are now unemployed."
This isn’t Armageddon
