The inaugural EY Global CEO Confidence Index finds broad consensus among CEOs that economic conditions, investment opportunities and their ability to grow will be positive over the next 12 months. This mirrors the recent outlook from EY economists (via EY.com US), who anticipate a modest 3.1% increase in global GDP in 2024, and a slight acceleration to 3.2% in 2025.
The results vary by region, country and sector, but no countries or sectors are anticipating a severe downturn.
The survey finds CEOs confident, but not overly so, in their near-term outlook. They are not assuming strong economic tailwinds, but they see a path forward. And they are prepared to act and adapt to take advantage and grow in this ever-shifting business environment.
CEOs are more confident about growth in their own sector than at either the global or local level. This is not surprising. CEOs often feel more confident about growth in their own sector because of their experienced knowledge and direct influence. They have deep insights into industry trends, competitive dynamics and market opportunities specific to their field.
This is in line with the EY CEO survey in April, in which CEOs resilience had fueled a more positive outlook about growth and profitability, and greater comfort in navigating external challenges outside their own authority.
Similarly, there is also a slight difference in their optimism about organic investments and their technology transformation compared to inorganic measures, such as M&A or joint ventures (JVs).
This broad confidence by CEOs is important for the global economy. History shows that a lack of confidence among business leaders can significantly contribute to or worsen economic downturns. When leaders lose faith in future prospects, they tend to postpone or cancel investments, reduce hiring and cut costs. A more cautious approach often leads to decreased spending on capital goods, research and expansion, slowing economic growth. Reduced hiring and potential layoffs increase unemployment, reducing consumer spending power.
The ripple effect of businesses scaling back operations is felt throughout the supply chain, affecting other companies and sectors. This pessimism can become a self-fulfilling prophecy, as reduced economic activity confirms leaders’ initial fears, further eroding confidence and perpetuating the cycle of economic contraction, potentially deepening a recession, or prolonging a downturn.