Despite heightened global trade tensions and increasing disruption, 92 per cent of chief executive officers in Singapore remain confident about the growth prospects of their companies for the next three years, according to professional services firm KPMG's global CEO outlook study released yesterday.
However, their confidence in the global economy dropped to 64 per cent from 77 per cent last year.
The study gives a three-year outlook from international executives on enterprise and economic growth.
Conducted between January and February, the 2019 survey covered 1,300 CEOs in 11 key markets and 11 key industry sectors. One-third of the companies surveyed have more than US$1 billion (S$1.37 billion) in annual revenue.
Only 28 per cent of CEOs in Singapore expect a revenue growth of 2 per cent and above.
Mr Ong Pang Thye, managing partner of KPMG in Singapore, said: "The initial rounds of uncertainty from the trade tensions have dampened Singapore CEOs' confidence in the global economy and their expectations of top-line growth."
In the medium term, however, the trade tensions could prompt US, China and other multinational corporations to shift some components of their supply chain to South-east Asia, which will create higher demand and a knock-on positive effect on growth for Singapore firms with South-east Asian presence, Mr Ong noted.
Operational risks emerged as the top threat to growth for Singapore and Asean CEOs this year, KPMG's study showed.
IMPACT OF TRADE TENSIONS
The escalating US-China trade tensions have created new business risks that are translating into operational risks for companies.
KPMG, whose study showed operational risks emerged as the top threat to growth for Singapore and Asean CEOs this year.
"The escalating US-China trade tensions have created new business risks that are translating into operational risks for companies," KPMG said in a media statement yesterday.
In terms of key drivers of growth, 32 per cent of Singapore CEOs said mergers and acquisitions are the most important strategy for them to build size and scale quickly over the next three years.
Two-thirds of global CEOs are targeting emerging markets for geographical expansion in the next three years, with the Belt and Road Initiative (BRI) viewed as a significant growth opportunity.
Said Mr Ong: "China knows that it needs to work on the BRI projects with an additional partner, and Singapore is beginning to fill that role from a position of trust and skill."
This is because Singapore has a longer history of working with China and other global infrastructure players, and is often viewed as a skilled partner in negotiation, he added.
Singapore also has a developed legal system and is favoured as a mediation and arbitration hub for cross-border disputes.
"Singapore companies and private equity funds should recognise the enormous opportunities the BRI presents and tap these to take themselves to the next level of growth," said Mr Ong.