The world economy is preparing for a possible recession, which will be caused by the energy crisis, geopolitical tensions and the resulting inflationary pressure. These economic developments, combined with rising interest rates, create risks but also business opportunities, emphasizes Bob Moritz, President of the PwC Global Network (Global Chairman), who was in Athens this week as part of a meeting of 500 PwC Network Partners from Europe regions. Middle East and Africa. Despite the big problems at the international level, the head of the chamber around the world remains optimistic about Greece. As he usually states, “Greece has regained access to international markets, the country’s risk has dropped significantly, and we have recently witnessed some notable transactions by international players.” As such, he points out that these are “optimistic signs of a successful recovery” and that “Greek businessmen, whom I had the pleasure of meeting during my stay, confirmed that the steady improvement of the economy increases the desire to invest in the country.” Bob Moritz held a number of meetings with leading Greek businessmen and bankers during his stay in Athens and events held at the Divani and Astir Palace hotels on the Attic Riviera. years, characterize the “substantial realization of systemic long-term problems that we as a society have not been able to deal with”. And notes that “to cope with them, large-scale transformations will be required, in which the expectation of immediate benefits should not be the main goal.” However, he adds that the current negative international environment “should not prevent us from achieving our long-term goals.” With regard to decarbonization and the transition to a sustainable economy, it reveals a strong readiness for change, which, however, is limited by the fragile geopolitical and economic environment. He acknowledges that soaring energy prices and the need to spur global growth in the wake of the pandemic have limited recent progress, but insists that “a world where energy comes from low-carbon fuels will be protected from geopolitical upheavals.” He also talks about the need to build trust in the context of what he calls the “New Equation” – PwC’s global strategy – “an element needed to solve problems.” Referring to the investments made by PwC in Greece, it is explained that the company aims to develop throughout the territory by opening additional offices in Thessaloniki and Patras, and soon in Ioannina, through which it offers quality employment opportunities to the local market and society.

– The global economy is preparing for a possible recession, which will be associated with an energy crisis, geopolitical tensions and subsequent inflationary pressures. Central banks in Europe and the US are aggressively raising interest rates to curb inflation, but a return to the pre-pandemic trend is unlikely anytime soon. This fact creates significant risks for the business, but at the same time creates opportunities for those who are flexible enough to take advantage of them.

– Higher interest rates will increase the cost of financing, which in turn may affect whether and to what extent certain transactions are realized.

However, there are currently other more significant factors that will determine M&A activity. For example, businesses need to transform to deal with issues such as energy transitions and supply chain disruptions. And business deals can help accelerate that transformation.

In addition, private equity funds will continue to look for opportunities given the large amount of capital available to them. By our calculations, up to June 2022, funds to invest amounted to $2.3 trillion, three times more than the 2007 equivalent.

Another impact of higher interest rates is that heavily indebted companies can be driven into bankruptcy, leading to asset sales or forced takeovers and mergers.

The continuous improvement of the Greek economy increases the desire to invest in the country.

– Greece has regained access to international markets, the country’s risk has decreased significantly, and we have recently witnessed some notable transactions by international players.

These are encouraging signs of a successful recovery. Greek businessmen whom I had the pleasure of meeting during my stay confirmed that the continuous improvement of the economy increases the desire to invest in the country.

– We note that companies are paying more and more attention to ESG issues, which is positive. In addition, enterprises are actively working to anticipate the development of the market. Regulators are focusing on change by introducing a set of mandatory ESG reporting standards.

At the same time, companies are scrutinized by customers, employers and other stakeholders on how they meet the ESG criteria, which can affect their reputation and ability to attract customers and employees.

On the environment side, governments that control 90% of the world’s GDP have made significant commitments to cut gas emissions. Obligations that can only be realized if the economic activity of the country and business is consistent with them.

The challenge now is to avoid ambiguity. Lack of global harmonization leads to fragmentation, and regulatory fragmentation is costly for companies, capital markets and society.

– With regard to decarbonization, we see a strong desire for change. However, this is limited by the fragile geopolitical and economic environment. Soaring energy prices and the need to accelerate global growth in the wake of the pandemic have limited recent progress.

According to PwC’s Net Zero Economy Index, global carbon intensity should decline by 15.2% per year, eleven times faster than the average over the past two decades.

Some argue that the current global energy crisis is the reason why change is slowing down. In practice, however, it shows the complete opposite. A world where energy comes from low-carbon fuels will be protected from geopolitical upheaval. It will also benefit from cheaper energy thanks to the sharp drop in the cost of renewable energy technologies.

Investments

“Despite the pandemic, energy and inflationary crisis, PwC in Greece has never stopped investing in skills, technologies and initiatives that create new opportunities for its clients, employees and society. Over the past three years, the company’s workforce has increased by about 50%, from 1,100 employees in 2019 to more than 1,700 today. In addition, the company recently announced its plan to invest in a new sustainable LEED Gold certified office building in Athens designed to support a work environment that promotes creativity, collaboration and learning. At the same time, he is committed to development throughout the territory, investing in additional offices in Thessaloniki and Patras, and soon in Ioannina, through which he offers quality employment opportunities to the local market and society.

– How do new megatrends affect the world and how does PwC’s New Equation strategy aim to address global challenges?

– In recent years, the world has been called upon to face one crisis after another. These crises are an important realization of the systemic long-term problems that we as a society are unable to cope with. Their solution will require massive transformation, in which the expectation of immediate benefits should not be the main goal. Organizations must focus on delivering results that are sustainable over time, fit their purpose, be financially successful, and enable the world to address the systemic challenges it faces. No single organization can solve these problems alone, so building trust has become more necessary than ever. That’s why we’ve put trust and sustainable results at the heart of our New Equation strategy, which aims to support our clients and stakeholders so they can tackle their biggest challenges while achieving their goals for the benefit of society and the planet.