EY-Parthenon CEO Outlook: Chief Executives spot bright signs in a cloudy economy

CEOs around the world – including those in Singapore – are confident in their ability to navigate an economic landscape characterized by persistent volatility, according to the latest CEO Outlook from EY-Parthenon.

In an age of volatility, most CEOs worldwide (57%) told EY-Parthenon that they expect today’s geopolitical and economic uncertainty to last well beyond a year, with 24% believing it will last three years or more. In Singapore, those numbers are 47% and 22%, respectively.

The survey data, which includes 40 respondents from Singapore, shows CEO resilience does not stem from confidence that current volatility will ease. Rather, the increase in confidence reflects leaders becoming acclimatized to uncertainty, rewiring operating models, embracing change, and finding new ways to thrive in spite of the shifting sands of the global economy.

Understandably, the survey’s CEO Confidence Index – a measure from 1 to 100 that quantifies CEO sentiment globally across a wide range of business dimensions – came up strong, standing at 82 for Singapore respondents (global 83), up from 63 (global 76) since the previous survey in May.

This increased optimism primarily stems from a combination of stronger confidence in their own earnings and profitability and the adaptability that businesses have shown in navigating global challenges. Another factor likely bolstering CEO confidence, said EY-Parthenon, is the resilience of financial markets and the sustained access to capital.

Learning to thrive amid uncertainty

One key takeaway from the survey is that CEO respondents are embracing change and transformation: 47% of Singapore respondents (global 52%) plan to increase their investments to accelerate portfolio transformation in the next 12 months, with a further 48% (global 39%) maintaining a level of transformation consistent with recent years.

Going regional and local

The survey indicates broad agreement that the shape of the global economy is shifting, with localization (such as producing goods in the country where they will be sold) and regionalization (such as creating regional supply chains to serve a particular bloc) gaining significant traction.

81% of Singapore CEOs (global 72%) surveyed say they regard localization as a long-term strategic shift, with 65% (global 63%) echoing this sentiment for regionalization. This shift is largely driven by the need to adapt to changing market dynamics and customer expectations, allowing companies to respond more swiftly to local demands.

This long-term strategic approach is reflected in respondents’ current plans for regional and local implementations: 33% of Singapore respondents (global 38%) say they have already completed localization plans, with a further 30% (global 36%) currently in the process of implementing. As well, 6% of Singapore respondents (global 21%) say they have completed regionalization plans, with a further 40% (global 35%) in mid-implementation.

Purandar Rao, a leader at EY-Parthenon said: “Today’s CEOs are not merely reacting to the challenges posed by market and policy volatility; they are using it as an opportunity to transform their businesses. The findings of our survey highlight a clear shift toward localization, as leaders seek to stabilize their operations, while evaluating opportunities that are being created by disruptions in global trade flows.”

Fellow EY-Parthenon leader Joongshik Wang added: “The strong Singapore tilt toward localization contrasts against global respondents who appear to be more focused on regionalization. This may be due to Singapore’s role as a hub where local responsiveness in serving Southeast Asian markets is critical. As such, this may lead to a more conservative approach toward regionalization, where there can be more significant execution risks and regulatory uncertainty than in Singapore.”

M&A activity remains robust

Almost half of CEOs respondents (Singapore and global 48%) expect to pursue traditional mergers and acquisitions (M&A) deals. In further signs of inorganic growth activity, 70% (global 73%) anticipate engaging in joint ventures or strategic alliances.

Singapore-based CEOs view the local market as the top investment destination for planned M&A activity, followed by the UK and US. Globally, the US continues to be the primary destination for planned M&A activity, followed by Canada, the UK, India and Germany.

Notably, 32% of Singapore CEO respondents (global 41%) pursuing M&A are targeting companies for their technology or intellectual property (IP), underscoring the critical role of technological innovation in today’s competitive landscape.

“Improved CEO sentiment toward inorganic growth, be it through M&A or strategic alliance, is unsurprising, given the improved financial confidence, easing borrowing costs and strong availability of private capital,” said Geophin George, partner at EY-Parthenon. “The agenda is clearly focused on growth, localization and building innovation and technical capabilities to future proof the business.”