Almost two thirds of businesses are hopeful about the outlook of the economy for the next 12 months, according to new data from Grant Thornton Ireland.
Its latest Global Business Report survey shows 61% of firms remain optimistic, while more than half (52%) expect revenue to increase this year.
One third (30%) say they will need to ramp up their digital transformation to survive the current crisis.
Ireland ranks tenth in the global survey, and is the highest in Europe in terms of outlook for the economy for the coming 12 months.
Michael McAteer of Grant Thornton Ireland said: “It is heartening to see that Irish businesses are remaining optimistic about the coming 12-month period despite anxieties which remain around Brexit and the COVID-19 pandemic.
“Whilst the outlook is showing real improvement with both economic optimism and expectations around revenue and profits on the rise, it is important to note the context of these increases.
“In many cases the improvements we are seeing are due to firms benchmarking the next 12 months against the very depressed economic environment of 2020 due to COVID-19.”
Even with Brexit taking hold almost one third (31%) of Irish businesses expect to increase their exports this year, according to the report.
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Meanwhile, 27% of businesses expect to grow revenue from non-domestic markets as 16% of businesses also expect to increase the number of countries they sell to. Mr McAteer predicted: “Even with vaccines being rolled out, the reality is it will still be some time before we return to anything approaching normality.
“Shortage of finance remains a significant concern, with 31% of Irish firms identifying it as a business constraint over the next 12 months.
“This is against the backdrop of record monetary easing and fiscal support for businesses to provide assistance and alleviate cash flow concerns arising from COVID-19.”
Unsurprisingly, the pandemic has caused a huge spike in economic uncertainty with 61% of businesses in Ireland indicating it is the number one constraint on their ability to grow their business.
And while optimism has increased, this has not yet materially flowed through to orders, with 34% citing shortage of orders as a constraint. Businesses are also concerned about the availability of skilled staff (34%) and labour costs (44%) with business citing each as a constraint on their ability to grow.
Globally, sentiment has improved across nearly all countries and regions, with 57% of firms optimistic about the economic outlook to year end. Overall Ireland ranks eighth in terms of revenue forecast, the highest across Europe.