EY survey finds global CEOs bullish on growth, profitability

According to the latest EY CEO Outlook Pulse survey, CEOs are optimistic about their ability to drive revenue growth and profitability in 2024, in spite of global economic headwinds.

The EY quarterly survey of 1,200 global CEOs across 21 countries, on their prospects, challenges and opportunities, shows they are bullish on business performance, even in a low growth environment. A significant majority of CEOs surveyed expect an increase in revenue growth (64 per cent) and profitability (63 per cent).

This optimism comes despite acknowledgement of a continued challenging macroeconomic environment, with three-quarters (76 per cent) of CEOs surveyed expecting the global economy to continue to endure low or no growth. While 78 per cent are preparing for interest rates staying “higher for longer” due to ongoing inflationary pressures, and over half (57 per cent) are forecasting an increase in the cost of business.

Lift-off for deals market in 2024

CEOs are anticipating a deals market bounce-back with eight in 10 (79 per cent) respondents predicting an uptick in mergers and acquisitions (M&A) megadeals above US$10bn. Thirty-six per cent of respondents are also actively pursuing M&A transactions over the next 12 months, and a further 29 per cent are seeking divestments. The US maintained its position as the most attractive target region in terms of M&A activity followed by Japan, the United Kingdom, China and India. Manufacturing was identified as the top sector for M&A deals, closely followed by ‘banking and capital markets’, ‘insurance’, ‘consumer products’ and ‘mobility’ rounding up the top five.

This quarter, the survey also captured the perspectives of 300 private equity (PE) leaders across more than 20 countries, regarding their investment and portfolio management outlook. Mirroring CEO sentiment, the majority of surveyed PE leaders (71 per cent) also predict an uptick in megadeals. Seventy per cent of surveyed PE leaders predict an increase in corporate divestment, or carve out activity in 2024, signifying a more buoyant deals market than seen in the previous year.

Transformation plans speed up; focus on efficiencies   

Underpinning the rise in CEO confidence is a rush toward strategic transformation, with 58 per cent of CEOs surveyed accelerating their business transformation agendas – a significant leap, almost tripling from 21 per cent in July 2023. In stark contrast, only 5 per cent now report having no transformation plans, a fall from 37 per cent in July 2023.

Nevertheless, despite the bullish sentiment, CEOs are demonstrating pragmatism in their approach to business transformation. Primary focus areas include efficiency enhancements and cost-management strategies. Namely, 42 per cent of CEOs and 45 per cent of private equity leaders surveyed are prioritising managing their working capital effectively. CEOs are also embracing technology as an efficient driver, with 41 per cent looking to adopt artificial intelligence to drive efficiency and bolster business performance. Interestingly, while surveyed CEOs are embracing AI to deliver efficiencies, three in four (76 per cent) agree the technology will have little impact on revenue growth.

Geopolitical risks centre-stage in elections bumper year

With over half the world’s population going to the voting booth over the next 12 months, CEOs are acutely aware of geopolitical risks and the potential business impact. Over three-quarters of those surveyed (78 per cent) are worried about the potential rise of populist movements to increase geopolitical uncertainty and create business challenges. Seventy-six per cent of respondents were also concerned about the political misuse of AI in major 2024 elections.

While many CEOs feel confident about their organisation’s ability to integrate geopolitical turbulence into their decision-making, nearly half (48 per cent) of respondents believe there is room for improvement in their defined and active processes for managing geopolitical risks. In fact, 98 per cent of CEOs and PE leaders surveyed are having to make alterations to their investment plans including exiting certain businesses (32 per cent of CEO respondents and 38 per cent of PE respondents) or delaying a planned investment (42 per cent of CEO respondents and 32 per cent of PE respondents).

“The insights of the global survey coincide with our Cyprus forecasts,” noted Ronald Attard, Country Managing Partner for Cyprus, adding that: “the Cypriot economy is exhibiting resilience, despite the challenges it has been facing.”

Continuing, he pointed out that: “the Outlook’s insights showcase global trends and priorities, useful for the strategic planning of Cypriot businesses. At EY Cyprus, we have placed our efforts in embracing change and building a better working world. It’s our fundamental principle through everything we do, and our vision is a world that will drive transformation, inspire trust and confidence, and support talent and leadership.”

To read the full report, please visit: ey.com/CEOOutlook.