Australian CEOs may be cautious about the economic outlook, but that caution is not translating into the same level of pessimism about their own businesses.

The latest Vistage CEO Confidence Index reveals a clear divide between how business leaders view the broader economy and how they see the prospects for their own organisations.

Only 6 per cent of CEOs surveyed expect economic conditions to improve over the next 12 months, while just over half expect them to deteriorate. This follows a significant decline in sentiment about current conditions, with only one in four CEOs believing the economy is the same or better than it was a year ago.

Yet when CEOs turn their attention to their own businesses, the picture is considerably more resilient.

Around two-thirds expect revenue to increase over the next 12 months and 74 per cent expect profitability to either increase or remain stable. Employment intentions also remain relatively solid, with almost 80 per cent expecting employee numbers to remain unchanged or increase.

Investment intentions have also rebounded, despite continued uncertainty.

It suggests that while CEOs have limited confidence in the broader operating environment, many retain confidence in their ability to navigate it.

Pressure is coming from multiple directions

That confidence should not be mistaken for an easy operating environment.

More than 90 per cent of CEOs expect business costs to continue rising over the next 12 months. Labour costs are the most commonly identified external pressure, alongside weaker customer demand, skills shortages, regulatory compliance and broader economic uncertainty.

Businesses are trying to protect margins while managing higher employment costs, more cautious customers and ongoing competition for talent. Around one-third of CEOs expect their own prices to remain unchanged or decrease, reinforcing the difficulty many businesses face in passing increased costs on to customers.

The challenge for leaders is therefore not simply finding growth. It is finding profitable growth.

CEOs are also looking beyond today's pressures

One of the more interesting findings from this year's Index comes from asking CEOs about their biggest challenges and opportunities.

Rising costs, softer demand, workforce pressures and regulation feature prominently among the challenges. But when CEOs look at opportunity, the conversation changes.

AI and automation emerge strongly, alongside business growth, increasing market share, diversification and operational efficiency.

This suggests CEOs are managing two horizons at once: responding to immediate pressures while positioning their businesses for future growth.

That same pattern is evident in their strategic priorities. Revenue growth and margin improvement remain at the top of the agenda, but operational efficiency, AI implementation and leadership capability also rank highly.

For many leaders, the response to a more difficult environment is not simply to cut costs. It is to strengthen the organisation's ability to perform within it.

The strategy challenge is increasingly about execution

The survey also explored how CEOs approach strategy and leadership within their organisations.

More than three-quarters believe their strategic plans contain clearly defined goals and objectives, while 91 per cent say their leadership team understands the organisation's strategy. Most also report measuring progress through defined metrics and KPIs.

Where the picture becomes more nuanced is execution.

While 75 per cent believe they can clearly articulate their competitive advantage, only 62 per cent believe resources are well aligned with the priorities in their strategic plan.

Open-ended responses reinforce this gap. CEOs identified finding sufficient time and resources for strategic planning, balancing day-to-day operational demands with longer-term priorities, and maintaining focus and accountability through implementation as recurring challenges.

For many organisations, the issue may not be creating another strategy. It is creating the organisational capacity and discipline to execute the strategy already in place.

Building leadership capability

Leadership development is also becoming an important part of that capability.

Almost half of CEOs report having a structured development program for current and future leaders, while a further 22 per cent plan to introduce one.

Development takes many forms, including internal mentoring and coaching, external programs, peer advisory groups and tertiary or industry-based learning.

This matters because execution cannot sit with the CEO alone. As businesses become more complex, CEOs increasingly need leadership teams capable of making decisions, maintaining strategic focus and translating priorities throughout the organisation.

AI moves closer to the strategy table

AI is moving quickly from experimentation towards strategic consideration.

More than half of CEOs surveyed report incorporating AI into their strategic planning process, while AI implementation ranks among their leading strategic priorities.

Open-ended responses also reveal a pragmatic view of the opportunity. CEOs are looking at AI and automation as ways to improve productivity, efficiency and competitiveness rather than adopting technology for its own sake.

The question for many organisations is shifting from what AI can do to where it can create meaningful business value.

Confidence in what leaders can control

Perhaps the most telling finding from this year's Confidence Index is not the decline in economic sentiment, but the resilience that sits alongside it.

CEOs cannot control interest rates, inflation, geopolitical uncertainty or consumer confidence. But they can make decisions about where to invest, how to improve productivity, how to develop their leaders and how effectively their organisations execute strategy.

The latest results suggest many Australian CEOs are concentrating their attention there.

Confidence in the broader economy may remain subdued, but confidence in their own businesses remains comparatively stronger.

In an uncertain environment, that distinction matters.

Explore the full findings

The latest Vistage CEO Confidence Index provides further insight into the economic outlook, business pressures and strategic priorities shaping Australian CEOs’ decisions.