Singapore’s corporate leaders are showing a sharp drop in confidence heading into 2025, even as their global counterparts maintain an increasingly optimistic outlook, a new report finds.

The latest EY-Parthenon CEO Outlook Survey, which covered 1,200 global CEOs, including 40 from the city-state, highlights a stark divergence in sentiment, with inflation and economic uncertainty weighing heavily on Singapore’s business leaders.

While global CEO confidence rose from 70.5% to 73.5% from 70.5% in September 2024, Singapore’s confidence level dropped significantly to 54% from 72% over the same period. The survey says the decline underscores Singapore’s vulnerability as an open economy, with supply chain disruptions and high operational costs continuing to add pressure on local businesses.

“Global cost of operations remains high and this is exacerbated by the ongoing global geopolitical and macroeconomic uncertainties, which continue to weigh on the minds of Singapore’s corporate leaders,” says Andre Toh, EY Asean and Asia-Pacific valuation, modeling and economics leader.

“Further, as an open economy, Singapore is vulnerable to supply chain shocks and trade disruptions, which have been escalating in recent months. Until the dust settles and greater certainty returns to the business landscape, Singapore’s corporate leaders can be expected to be more cautious with their decision-making.”

M&A and investment trends

Despite the dip in sentiment, 40% of Singapore CEOs still plan to pursue mergers and acquisitions in the next 12 months, though this is a decline from 48% in September 2024. In contrast, global M&A appetite rose, with 56% of CEOs expecting to engage in deals, signalling a wider confidence gap.

However, Singapore executives remain committed to restructuring their portfolios, with 60% planning divestments or carve-outs, a robust increase from 40% in the last survey. They are also shifting focus to regional investments, with top destinations including Malaysia, Indonesia and Hong Kong. The report says this preference for nearby markets reflects a strategic pivot towards resilient, high-growth economies in the region.

While over 56% of Singapore CEOs are confident in their ability to transform their business models, 55% indicate that declining profitability may lead to workforce reductions, a significantly higher proportion than the 42% of global CEOs who share the same concern.

This tension between transformation ambitions and cost pressures may define Singapore’s corporate landscape in 2025, says the report.