Credit: EY
Middle-market companies have been found to be more optimistic in 2018 than last year in terms of business conditions and opportunities, according to the EY Annual Growth Barometer.
This barometer, presented at the annual World Forum taking place on the occasion of the EY World Entrepreneur of the Year, also highlighted the improved growth prospects of the world's major economies in 2018, with the International Monetary Fund currently expecting GDP growth rates of around 3.9% per year. In this favourable climate, business leaders have confidence in an upward trend in revenues.
The annual survey, conducted among 2,766 middle-market executives from 21 countries in 9 key sectors of this market, shows confidence in consolidating corporate growth over the last 12 months. 60% of companies aimed for a growth of 6-10%, compared to 34% last year. Another 27% expect growth to exceed 10%, which is a slight decrease compared to 2017, when 30% of companies were in a phase of strong growth. In addition, none of the respondents in 2018 expect a decline in growth, compared to 5% in 2017.
Mid-market companies expect higher revenues, more full-time jobs, and the implementation of innovative technologies to achieve these ambitious growth goals. Despite this upbeat outlook, companies remain concerned about the lack of cash flow, credit crunch or slowing global demand, all of which are likely to pose significant risks in the longer term.
Moreover, process automation and machine learning technologies, key technologies, are now in the spotlight and enable SMEs to count on ambitious growth. The attitude towards new technologies has changed rapidly since last year. In 2017, 74% of CEOs of mid-market companies said they never wanted to use robotics for process automation (RPA). Just 12 months later, 73% of respondents say they are already adopting or expecting to adopt Artificial Intelligence (AI) in the next two years. In this context, the results of the EY Growth Barometer highlight the need for companies to become more agile. However, only 7% of leaders intend to invest in technology to reduce the risk of cyber-attacks in the coming year and only 6% consider cyber-attacks as dangerous for their growth.
EY's Growth Barometer also identified a new trend this year: regulation, a pledge of innovation stimulation, has emerged as a new force. This is a major turnaround in the general opinion expressed by all active leaders in all sectors and regions, with the exception of North America. Regulation is now seen as a driver of innovation (25%), preceded only by profitability (27%). At a time when governments are using regulatory levers to improve social welfare, business leaders are doing the same and are seizing these new market opportunities to innovate and continue their growth.
Sector-wide convergence is now one of the major forces influencing growth, with almost a quarter of world leaders (23%) ranking it second only to population growth (33%) as having the greatest impact on companies. Among American leaders, this convergence even made it to first place (31%).
