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Business Confidence Down, but “Still Room for Optimism” - Says IoD CEO

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Advance findings from the IoD Ireland Q4 2022 Director Sentiment Monitor (DSM) report indicates that business leaders are less hopeful this year, than they were in 2021 about the year ahead.

The new findings show that just over one-in-two (54%) business leaders believe the financial performance of their primary organisation will improve for the year 2023. However, in a year-on-year comparison, when asked this question in Q4 2021, 77% of business leaders were hopeful the financial performance of their primary organisation would improve in 2022. 

In addition, just 15% of business leaders are now ‘more optimistic’ about the economy in Q4 2022 compared to the previous quarter.

Commenting on the findings, Caroline Spillane CDir, Chief Executive Officer of the Institute of Directors (IoD) in Ireland, commented:

“While business leaders were more hopeful last year for the year ahead than currently, signs of confidence remain. Just over one-in-two business leaders are hopeful that the financial performance of their primary organisation will improve in 2023, so there is still room for optimism. Business continuity plans were the saving grace of many businesses when COVID-19 hit.  As we remain in unpredictable times, I would recommend that all business leaders review and assess their business continuity plans to ensure they are future proofed."

The IoD research for Q4 2022 has also found that geopolitical/economic instability is seen by nearly a quarter (25%) of business leaders as the leading risk factor facing their organisations. This is followed by inflation (15%) and labour sourcing/quality/capability/retention (13%).

There are some positives for the Government in the IoD report, too. The findings reveal the Government’s performance is seen by a majority of business leaders (58%) as positively impacting consumer confidence. It also reveals that 49% of business leaders see the Government performance as positively impacting business decision-making.

The advance findings of the IoD’s Director Sentiment Monitor for Q4 2022, to be published in full in January 2023, include:

Financial performance for the year 2023: When asked, ‘Do you think that the financial performance of your primary organisation will improve for the year 2023?’ the business leaders replied as follows:

Financial performance for the year 2023: When asked, ‘Do you think that the financial performance of your primary organisation will improve for the year 2023?’ the business leaders replied as follows:

  • Yes: 54% (Year-on-year comparison; 77% in Q4 2021)
  • No:  33% (Year-on-year comparison; 14% in Q4 2021)
  • Don't know: 13% (Year-on-year comparison; 8% in Q4 2021)

Confidence in the economy: When asked, ‘In respect of the Irish economy, how do you feel now compared to the previous quarter?’ the business leaders replied as follows:

  • More optimistic: 15% 
  • More pessimistic: 42% 
  • No change: 43% 

Financial performance for Q1 2023: When asked, ‘Do you think that the financial performance of your primary organisation will improve in Q1 2023?’ the business leaders replied as follows:

  • Yes: 43% 
  • No:  44% 
  • Don’t know: 13% 

Biggest risk: When asked, 'At present, what do you believe is the single biggest risk facing your organisation?' the respondents chose as follows (top three findings from a list of 20 options):

  • Geopolitical/economic instability: 25%
  • Inflation 15%
  • Labour sourcing/quality/capability/retention: 13%

Effect of Government’s performance: What do you believe has been the effect of the current Government's performance to date on the following:

Consumer Confidence

  • Positive    58%
  • Negative   16%
  • No Effect   27%

Your Business Decision-Making

  • Positive    49%
  • Negative   9%
  • No Effect   42%