CEOs pivot from expansion to profit amidst energy shocks, EY says

Firms are now focusing on financial flexibility, operational efficiency and productivity gains.

Geopolitical risk is driving a shift in corporate strategy towards profitability discipline and AI-led restructuring, as CEOs move away from expansion-led growth models, according to EY’s latest CEO survey.

The CEO Confidence Index amongst Singapore respondents stood at 73.5, down from 80 three months earlier. Confidence in domestic growth remained higher at 81.0, the second-highest globally.

Nearly half of respondents in Singapore said sustained energy price shocks would create significant operational and financial headwinds. This was shared by 46% of respondents globally.

The survey found that 88% of Singapore CEO respondents are prioritising long-term growth and profitability over rapid expansion, with firms focusing on financial flexibility, operational efficiency and productivity gains, compared to 82% globally.

About 68% of Singapore CEO respondents plan to increase AI investment in 2026, whilst 59% are pursuing acquisitions or divestments to access technology or AI capabilities.

AI is being deployed across customer value creation, strategy, finance, risk management, and innovation, with 45% of Singapore respondents reporting impact in customer value creation and strategy.

However, 27% of Singapore respondents said AI regulatory frameworks are increasing compliance and operational complexity, whilst 38% cited fragmentation and evolving regulation as barriers to scaling adoption.

EY-Parthenon ASEAN and Singapore Industrials Leader Sriram Changali said AI has moved beyond the technology function and is increasingly shaping enterprise decision-making.

All Singapore respondents expect AI to change workforce strategies over the next three years, but only 18% expect job reductions linked to AI adoption.

Instead, 43% expect large-scale reskilling and upskilling, whilst 50% are redesigning roles to integrate human and AI capabilities.

Talent constraints remain a key challenge, with 24% citing cultural resistance to change, followed by skills gaps and leadership capability gaps.

Changali said talent demand is shifting towards employees who can combine domain expertise with AI system management, whilst organisational culture remains a constraint to adoption.

Despite macroeconomic uncertainty, 88% of Singapore respondents planning M&A expect deal appetite to increase over the next 12 months.

Singapore remains the top investment destination for local respondents, followed by China, Malaysia, Switzerland, and South Korea.

EY-Parthenon ASEAN Transactions and Corporate Finance Leader Geophin George said dealmaking is becoming more selective, with technology capability and strategic fit driving decisions.

The survey found that 70% of Singapore respondents are pursuing strategic alliances, whilst 63% expect to undertake M&A activity and 53% are exploring joint ventures.