A quarter-on-quarter survey by the Institute of Directors (IoD) in Ireland has found that there has been a “seismic shift” in confidence among business leaders in respect of anticipated opportunities for market growth in 2020. The research has found that there has been a 53% reduction, on average, in business leaders envisaging opportunities for growth this year across all markets, domestic and overseas, from Q4 2019 to the end of Q1 2020.
In addition, the survey finds that only 3% of directors are ‘more optimistic’ in respect of the Irish economy in Q1 2020 by comparison to 30% in Q4 2019. Furthermore, 83% of business leaders rate as ‘significant’ the potential impact of COVID-19 on their organisation’s bottom line for the year 2020.
These are just some of the significant findings from the latest quarterly Director Sentiment Monitor, for Q1 2020, conducted by IoD Ireland between 18th-26th March 2020 amongst its 3,000 members, comprising CEOs and company directors. The Director Sentiment Monitor tracks business sentiment on a quarterly basis.
When asked the question, ‘In respect of your primary organisation, in which markets do you anticipate opportunities for growth in 2020?’, in Q1 2020, just 33% said the Domestic (Ireland) market, compared to 71% in Q4 2019 (a 54% reduction in business sentiment).
In terms of Ireland’s biggest markets, the picture is in some cases even starker:
- 16% said the EU, compared to 38% in Q4 2019 (a 58% reduction in business sentiment). The EU includes some of Ireland’s biggest trading partners, including Belgium, Germany, The Netherlands, France and Italy;
- 15% said the UK, compared to 30% in Q4 2019 (a 50% reduction in business sentiment);
- 13% said the USA, compared to 22% in Q1 2019 (a 41% reduction in business sentiment);
- 1% said Switzerland, compared to 4% in Q4 2019 (a 75% reduction in business sentiment);
- 6% said China, compared to 10% in Q4 2019 (a 40% reduction in business sentiment);
- 3% said Canada, compared to 8% in Q4 2019 (a 63% reduction in business sentiment);
- 4% said Japan, compared to 7% in Q4 2019 (a 43% reduction in business sentiment).
Maura Quinn, Chief Executive of the Institute of Directors in Ireland, said:
"There has been a seismic shift in business sentiment, quarter-on-quarter, in terms of markets’ growth prospects for 2020. The harsh reality is that business leaders envisage considerably fewer opportunities for growth in 2020, both domestically and overseas, due to the sudden impact of COVID-19. The shutdown of large sections of our economy is being mirrored in many of our biggest trading partners so any hope that we can compensate for the contraction in our economy by leveraging business overseas has faded.
The prognosis for the rest of the year will depend largely on how effectively the country can transition out of lockdown, and what extra support the Government will be able to provide to businesses to help kick-start the Irish economy. There is no avoiding the fact that this will be a slow, step-by-step process until the end of the year and beyond."
Some of the other key findings in the IoD’s Director Sentiment Monitor survey for Q1 2020 include:
- 3% are ‘more optimistic’ in respect of the Irish economy in Q1 2020 in comparison to 30% in Q4 2019. In addition, 96% of directors are ‘more pessimistic’ in comparison to just 23% in Q4 2019;
- 83% of business leaders rate as ‘significant’ the potential impact of COVID-19 on their organisation’s bottom line for the year 2020. Just 9% rate it as ‘marginal’ and 6% are ‘undecided’;
- Just 8% of directors think the financial performance of their primary organisation will improve in 2020 compared to 60% in Q4 2019, while 77% think it will not improve in 2020, compared to just 19% in Q4 2019;
- 81% of business leaders believe that COVID-19 is now the ‘biggest risk’ facing their organisation. This compares with the ‘effects of Brexit (22%), ‘political/economic uncertainty’ (21%), and ‘labour sourcing’ (20%), which were the leading risk factors in Q4 2019.
Read the Director Sentiment Monitor Q1 2020 report.