Brazilian executives remain cautious about the road to recovery despite an uptick in economic activity that kicked off 2021.
According to the latest EY Global Capital Confidence Barometer (pdf), 86% of Brazilian executives say that their companies have seen a significant decline in revenue and profitability in the wake of the COVID-19 pandemic, which halted Brazil’s economy in its tracks. With a strong second wave of the virus moving across the country, the greatest risk to business growth remains the COVID-19 pandemic, according to executives in Brazil.
Only 17% of executives (vs. 46% globally) expect revenues to return to pre-pandemic levels in 2021. Another 52% expect it may take until 2022 or longer. Regarding profitability, Brazilian executives believe it will be 2022 (28%) or 2023 (38%) before a return to pre-crisis levels.
Strategic reviews identify digital and technology as growth drivers
With such uncertainty, almost every Brazilian company surveyed says its pandemic-accelerated strategic and portfolio review in the last year is part of a significant business and technology transformation.
The struggle is determining which pandemic-induced shifts are temporary and which are long-term as they identify areas of investment in technology and digital capabilities. Although 32% of executives believe their companies’ digital transformation efforts during the pandemic performed better than competitors’, as many (35%) believe their digital efforts underperformed.
To improve profit margins, 28% say they want to use technology and automation to improve scalability and replace high-cost labor. As many (27%) want to improve customer interactions through digital platforms.