CEOs are optimistic about their ability to achieve revenue growth and profitability in 2024 despite the global economic conditions, according to the latest EY CEO Outlook Pulse survey.

The quarterly survey by EY, which records the views of 1,200 CEOs from 21 countries worldwide, reveals their optimism regarding business performance despite a low-growth environment. A significant majority of CEOs participating in the survey expect an increase in revenues (64%) and profitability (63%).

This optimism persists despite CEOs recognizing the ongoing challenges of the macroeconomic environment, with three-quarters (76%) anticipating that the global economy will continue to experience low or negligible growth rates. Furthermore, 78% of CEOs expect interest rates to remain "high for a longer period" due to ongoing inflationary pressures, while over half (57%) foresee an increase in business costs.

CEOs anticipate a recovery in deal-making, with eight out of ten (79%) respondents predicting a rise in major mergers and acquisitions (M&A) deals over 10 billion dollars (megadeals). Additionally, 36% actively seek M&A transactions in the next 12 months, with a further 29% pursuing divestitures. The USA remains the most attractive target region for M&A activity, followed by Japan, the United Kingdom, China, and India. Manufacturing emerges as the top sector for M&A deals, followed by banking and capital markets, insurance, consumer products, and mobility.

The survey also captured the views of 300 private equity (PE) firm heads from over 20 countries regarding their investment outlook and portfolio management. Like the CEOs, the majority of PE firm heads (71%) predict an increase in major deals. Additionally, 70% anticipate a rise in divestitures in 2024, reflecting a more dynamic deal market than the previous year.

CEOs' increased optimism is linked to their intention to focus on strategic transformation. 58% are accelerating their business transformation programs – nearly triple the 21% in July 2023. Conversely, only 5% report having no transformation plans, compared to 37% in July 2023.

However, CEOs adopt a realistic approach to business transformation. Key areas of focus include performance improvements and cost management strategies. Specifically, 42% of CEOs and 45% of PE firm heads prioritize efficient working capital management. CEOs are also embracing technology to boost efficiency, with 41% seeking to adopt artificial intelligence to enhance effectiveness and business performance. Interestingly, while CEOs turn to AI for efficiency, three-quarters (76%) believe technology will have a minor impact on revenue growth.

With over half of the global population voting in the next 12 months, CEOs are fully aware of geopolitical risks and potential business implications. Over three-quarters (78%) are concerned that the rise of populist movements will increase geopolitical uncertainty and pose challenges to businesses. Additionally, 76% worry about the misuse of artificial intelligence during significant electoral shifts in 2024.

While many CEOs feel confident in their organization's ability to incorporate geopolitical upheavals into their decision-making, nearly half (48%) believe there is room for improvement in managing geopolitical risks. According to the survey, 98% of CEOs and PE firm heads are driven to change their investment plans, including withdrawing from certain activities (32% of CEOs and 38% of PE firms) or delaying a planned investment (42% of CEOs and 32% of PE firms).

Ronald Attard, Country Managing Partner at EY Cyprus, stated that the findings of the global CEOs survey align with the forecasts for Cyprus in 2024, as the Cypriot economy shows resilience despite the challenges it faces. The results present global trends and priorities useful for the strategic planning of Cypriot businesses and their further development. "At EY Cyprus, we invest our efforts in the changes taking place and in creating a better work environment. This principle is fundamental to everything we do and is believed to drive transformation, inspire trust, and support talent and leadership," Ronald Attard stated.