Inflation, economic volatility and war displace climate and cyber risks as top threats to business

Inflation, macroeconomic volatility and geopolitical conflict are now seen as the top threats to business here and abroad, displacing climate change, cyber and health risks, according to PwC.

The firm’s annual survey of chief executives reflects the changed priorities of business leaders after a year of turbocharged inflation and war in Ukraine.

While CEOs are concerned about the prospects for both the Irish and global economies, Irish CEOs are more upbeat about the economy and their own company’s prospects than their international counterparts. An overwhelming 85 per cent of bosses here are confident their companies will see revenue growth in the year ahead despite the uncertain economic backdrop.

At the same time more than half (52 per cent) believe that economic growth in Ireland will decline over the next 12 months, while three-quarters of global CEOs say the global economy will decline.

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“Ireland bucks global sentiment and views on some key trends, including on economic, investment levels and climate change action,” PwC said.

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PwC’s annual CEO survey is now an established barometer of company and business sentiment. As part of its 2023 report, it surveyed 87 Irish CEOs and 4,410 CEOs globally in October and November of last year.

In response to the current economic climate, Irish CEOs are looking to cut costs and spur revenue growth rather than cut headcounts or wages.

Some 79 per cent of Irish CEOs say they do not plan to reduce the size of their workforce in the next 12 months compared to 60 per cent globally. The vast majority (89 per cent) do not plan to reduce staff remuneration in order to retain talent, while 71 per cent will not implement hire freezes compared to 56 per cent globally.

The impact of the economic downturn is top of mind for Irish CEOs, the survey found, inflation (38 per cent) and macroeconomic volatility (26 per cent) leading the risks weighing on CEOs.

Close behind, 22 per cent of CEOs also feel financially exposed to geopolitical conflict. Climate change (9 per cent), cyber risks (8 per cent) and health risks (8 per cent) have fallen significantly in relative terms compared to last year when they were the top concerns, PwC said.

“Despite the many uncertainties and risks impacting our economy, the survey suggests that Irish CEOs are confident about their own businesses,” said Feargal O’Rourke, managing partner of PwC Ireland.

“Re-evaluating their operating models, continued investment in critical areas and putting their people front and centre are key to ensuring resilience,” Mr O’Rourke said. “And while there are headwinds, Ireland’s economy remains in a good position. With strong fiscal returns, continued foreign direct investment flows, a thriving export sector, high employment levels and indications that inflation may be easing, there are solid reasons why Irish CEOs have a more positive outlook than many of their global peers.”