Business News

Irish CEOs remain optimistic on the economy according to KPMG Annual CEO Outlook survey

By Business & Finance
06 November 2023

Irish CEOs remain confident on the outlook for the Irish economy and agree that generative AI is a top priority for their business, according to KPMG’s annual CEO Outlook survey of business leaders.

ESG continues to be an important strategic enabler with its greatest impact being on attracting the next generation of talent – talent that CEOs want to encourage back to the office. CEO confidence about three-year growth in the Irish economy is optimistic, up year on year from 76 percent in 2022 to 87 percent in 2023. According to the survey of over 1300 business leaders including 30 CEOs from Ireland, 60 percent of Irish CEOs have confidence in the growth of the global economy over the next three years. However, this is lower than the 73 percent of CEOs worldwide who express confidence in global economic growth.

In terms of prospects for their own businesses, almost three quarters (73 percent) of CEOs in Ireland remain confident that their company will grow over the next three years, slightly lower than the global figure of 77 percent.

Commenting on the survey findings, KPMG Managing Partner Seamus Hand said; CEO sentiment on   Ireland’s economy remains impressively positive. It’s encouraging and interesting that Irish CEOs are more bullish on the local economy than their global counterparts.”

63 percent of Irish CEOs have a “moderate appetite” for deal activity, with just under one in four of Irish CEOs (23 percent) citing a “high appetite” for M&A meaning they will undertake acquisitions which will have a significant impact on their organisations. This is less than half of equivalent global figure where 51 percent expect robust M&A activity.

An increasing range of interconnected challenges which are creating competition for attention and resources is putting CEOs under pressure. Disruptive technology, regulatory complexity and geopolitical conflicts are cited as the main threats to growth by Irish CEOs. As such, CEOs are changing their approach to address this complexity with over half (57 percent) of Irish business leaders adapting their growth strategies as a result of these interrelated challenges, as have 64 percent of their peers worldwide.

The growing opportunity and challenge of AI.

Generative AI remains a top investment priority for business, according to almost three in four (73 percent) of Irish CEOs, slightly higher than the global average of 70 percent.

CEOs in Ireland and worldwide display both hopes and fears about the advances in generative AI, almost in equal measure. In Ireland, advancing the digital agenda and connectivity is moving up the priority list of CEOs, jumping from 20 percent in 2022 to 27 percent this year and is regarded primarily as an enabler for future success.

However, at a micro level, emerging and disruptive technology are also cited by CEOs in Ireland as the number one threat to organisational growth, with 100 percent of CEOs believing it will negatively impact their organisations’ prosperity over the next three years. This is higher than the global average of 72 percent.

Seamus Hand believes AI needs clear prioritisation on the CEO agenda and says; “AI is a priority for leadership reflecting the clear opportunities and risks that it presents. It has the ability to revolutionise business and wider society, but it needs to be understood and leveraged carefully in the context of ethical and regulatory challenges.”

ESG prioritisation and investment in mandatory reporting capability.

CEOs continue to see their ESG strategy as being essential to maintaining a favourable reputation for attracting both customers and employees. The potential for impact on resourcing is felt more strongly in Ireland than globally, with 43 percent stating their ESGs strategy’s biggest impact is in attracting the next generation of talent, compared with only 14 percent globally.

However, the need for continued and additional investment in ESG reporting is clear with only 57 percent of Irish CEOs say they currently have the capability and capacity required to meet new ESG reporting standards – significantly lower than the global average of 74 percent.

Seamus Hand notes that “It’s not surprising to see ESG remain a continued area of focus for Irish CEOs and more particularly that they are listening to the next generation of talent in developing their strategies. The incoming CSRD (Corporate Sustainability Reporting Directive) will require leadership support and prioritisation by CEO’s to ensure companies can meet their obligations and with the strong demand for specialist capabilities it’s not surprising that many  are concerned they don’t have the capacity required to meet these reporting obligations.”

CEOs continue to invest in people while recognising there is further to go on the return to the office.

67 percent of Irish CEOs are placing more capital investment in developing their workforce over investment in new technology compared to 46 percent globally.

They continue to evolve their thinking on what the future of work may look like with many CEOs in Ireland (70 percent) believing there is still progress to be made on the ‘return to office’ agenda.

78 percent of Irish CEOs think it is likely that employees who come into the office could benefit through enhanced reward and recognition compared with 87 percent worldwide.