The world continues to face geopolitical tensions and economic uncertainty — but KPMG’s 11th CEO Outlook shows that leaders are positive, if cautious, about the future.
Despite confidence in the global economy falling to pandemic levels, 79 percent of CEOs are optimistic about their own organizations’ prospects and are strongly backing a combination of investment in AI (71 percent globally, 60 percent of Luxembourg CEOs) and retaining and retraining of high-potential talent (71 percent globally, 65 percent of Luxembourg CEOs) to sustain and fuel future growth.
Most CEOs (72 percent) have already adjusted their growth strategies to tackle ongoing, interconnected challenges. Looking ahead, the majority anticipate rising revenues and an increased workforce over the next three years. Expectations for AI investment returns have also accelerated, with most leaders now predicting results within one to three years — far sooner than the three to five years projected in 2024.
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In this complex environment, CEOs acknowledge they must rethink their organizations’ roles and capabilities as well as adapting their growth strategies. Greater agility and faster decision-making (26 percent globally, 40 percent in Luxembourg), transparency in communication (24 percent globally, 55 percent in Luxembourg), and the ability to identify, prioritize and manage risks (23 percent globally, 40 percent in Luxembourg) are seen as the top leadership capabilities needed today.
In terms of risks, economic uncertainty is seen as the top threat by CEOs — and risk resilience remains an indispensable attribute. This applies across multiple domains including technology (cybersecurity, data protection, ethical use of AI), talent (skills shortages and a pressing upskilling need, especially around AI) and ESG (navigating an increasingly politicized and polarized world, meeting the rising regulatory and reporting requirements relating to sustainability).
It’s a complex picture that is both challenging and energizing CEOs as they pursue growth, organizational prosperity and sustainable practices that will safeguard the business for the long term. The pressures are considerable — but so are the anticipated rewards for those organizations that can grasp the opportunities while tightly managing the risks.
Now in its eleventh edition, the KPMG CEO Outlook offers a unique window into the perspectives of business leaders in Luxembourg and around the world. Drawing on responses from more than 1,300 CEOs across a wide array of industries and regions - including Luxembourg - the report highlights the trends, priorities, and strategies shaping today’s global business landscape. Here are the key insights:
CEOs back their businesses despite economic uncertainty
Amidst ongoing geopolitical volatility, CEOs’ confidence in the global economy has fallen to its lowest level (68 percent) in five years, down from 72 percent a year ago. Despite this dip, they remain positive about the prospects for their own organizations with 61 percent forecasting earnings increases of 2.5 percent or more over the next three years.
To mitigate structural risks and ensure competitiveness, CEOs are signaling intent through investment in people, AI, M&A and organizational design. Ninety-two percent of leaders plan to increase headcount, while 69 percent are allocating up to a fifth of their budget on AI. Additionally, 89 percent anticipate M&A with moderate to significant impact over the next three years. Resilience and targeted investment in these areas are seen as the best strategies for addressing the structural risks and shifting dynamics faced by business leaders globally.
The top pressures influencing investment decisions are being mitigated in several ways, including:
• Cybersecurity and digital risk resilience (39 percent)
• Regulatory compliance and reporting (36 percent)
• AI integration into operations and workflow (34 percent)
CEOs are also acknowledging the increasing challenges of their roles — 59 percent believe that expectations and complexity have evolved significantly in the last five years with nearly a quarter (23 percent) singling out AI and broader digital literacy as essential leadership skills. In addition, 80 percent of leaders say they feel under more pressure to ensure the long-term prosperity of the business. However, this is much the same as a year ago — despite the turbulence, business leaders feel well-equipped to navigate what has become a persistently disruptive business environment. Change and challenge have become the ‘new normal’ and leaders are rising to the occasion.
In response to emerging challenges and the investments required to address them, both Luxembourg and global CEOs have already recalibrated their growth strategies. They have moved decisively from planning to implementation, demonstrating notable agility and rapid adaptability.
Leaders anticipate average earnings growth of approximately 2.5 percent or higher, though expectations vary across sectors.
Despite persistent economic headwinds, 65 percent of Luxembourg CEOs - compared with 92 percent of global CEOs - plan to increase headcount over the next 12 months, signaling continued confidence in long-term growth.
Luxembourg CEOs remain optimistic about their companies’ growth, with 15 percent “very confident” and 35 percent “confident” in their business prospects.
Confidence extends to the broader market: over 80 percent of CEOs express optimism about the growth potential of their industries.
65 percent of Luxembourg CEOs also report confidence in the global economic outlook.
CEOs forge ahead with AI investment and adoption while balancing risk
To navigate a shifting economic landscape, leaders continue to double down on AI and technological innovation. Over seven in ten CEOs (71 percent) say that AI is a top investment priority, a significant increase from a year ago (64 percent), and over two-thirds (69 percent) are allocating 10-20 percent of their budget on AI spending. At the same time, there is growing confidence about ‘time-to-value’, with 67 percent anticipating return on investment in one-to-three years. This marks a notable shift from a year ago, when the majority (63 percent) did not expect to achieve ROI until three to five years.
As AI continues to transform the corporate landscape, Luxembourg’s leaders are moving decisively to embrace its potential. Even amid ongoing economic uncertainty, a majority of CEOs see AI as a top investment priority and are planning significant budget allocations over the coming year. Confidence in their organizations’ ability to adopt AI, adapt workflows, and equip the workforce remains high, while boards are increasingly viewed as key enablers of technology-driven growth. At the same time, leaders are actively addressing the challenges that come with AI adoption, from workforce training to transparent communication about its impact on roles.
Overall, confidence around AI is strong, with 74 percent of leaders believing that their organization can keep pace with the rapid development of AI and its effects on adoption, operations or workflow. There is also high confidence (89 percent) that boards are equipped to navigate the adoption of advanced technologies to drive business growth.
CEOs see experimentation as a critical step in scaling AI adoption: 84 percent believe that employee experimentation, at all levels, is key and that everyone should be encouraged to take part. Leaders also recognize that transparency and openness about AI is essential. Nearly half (46 percent) say they are communicating openly with employees about the potential impact of AI on roles.
In a sign of how quickly AI is evolving, the majority of CEOs (57 percent) expect agentic AI to have a significant impact on their organization alongside generative AI.
But it is this very speed of change that also creates challenges. Although three-quarters (76 percent) of leaders say that their organization is ready for the integration of AI through robust governance, they also recognize a number of key issues to navigate, including:
• Ethical challenges (59 percent)
• Data readiness (52 percent)
• Lack of regulation (50 percent)
Regulation is a critical question on the minds of CEOs. Sixty—nine percent say the pace of regulation — its ability to keep up with the technology itself — will be a barrier to success.
60 percent identify AI as a top investment priority.
Most leaders plan to allocate 10–20 percent of their budgets to AI initiatives over the next 12 months.
45 percent feel their organization is on the right track with AI adoption.
60 percent believe their boards are equipped to guide AI adoption and leverage data strategically.
56 percent of Luxembourg CEOs report that their companies allocate 10–20 percent of their budgets to AI initiatives.
55 percent anticipate seeing a return on their AI investments within 1–3 years.
80 percent of Luxembourg CEOs believe AI can support their organization’s efforts in climate and sustainability.
90 percent of Luxembourg CEOs believe AI will help enhance climate risk modelling and scenario planning.
Competition for AI skills is a key focus for CEOs
Recognizing that the workforce is central to utilizing and making productivity gains through AI, CEOs are committed to people-led deployment of new technologies. Business leaders are reshaping workforces at speed: retraining, hiring and redesigning roles to embed AI.
A strong majority of CEOs (77%) believe that workforce readiness and upskilling in AI will directly affect their organization’s success over the next three years. At the same time, a limited pool of AI-skilled talent is a major competitive challenge, with 70% of leaders saying that competition for AI expertise could constrain growth.
In response, boardrooms are taking active steps. Seventy-nine percent of CEOs say that AI has already made them rethink how they train and develop employees. Over seven in ten (71%) are focusing on retaining and retraining high-potential talent, while 61% are actively hiring new talent with AI and broader technology skills.
Engaging employees in this transition is crucial, but CEOs acknowledge that this will require focus and support. Sixty-three percent are concerned about the possible impact of AI on company culture. Additionally, a third (33%) recognize that some employees’ unwillingness to adopt new technologies and adapt to changes poses a challenge.
However, AI is not the only concern for business leaders regarding their workforce. Labor market shifts and demographic changes — particularly an ageing workforce — are seen by 88 percent of leaders as having a moderate to high impact on recruitment, retention and culture. Nearly a third (30 percent) of CEOs highlight growing generational gaps on key future skills, while a quarter (24 percent) are worried about the number of employees retiring, coupled with a lack of skilled workers to replace them. Managing the multi-generational workplace has become a new strategic item on the boardroom agenda.
40% of Luxembourg CEOs identify competition with tech giants and their high-salary offerings as the second biggest challenge in attracting and retaining AI and digital talent.
AI education, workforce upskilling, and process streamlining rank among the top two operational priorities for Luxembourg CEOs, reflecting a strong focus on building internal capabilities to stay competitive in the digital era.
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CEOs are embedding sustainability at the heart of strategy and innovation
While attitudes toward ESG vary across regions, the KPMG 2025 CEO Outlook indicates that most corporate leaders remain strongly committed to their sustainability goals and are increasingly confident in meeting them.
In particular, 61% of CEOs say they are on track to achieve their 2030 net-zero targets, up from 51% a year ago. This may be due to businesses reviewing and reassessing their interim climate goals to be more realistic and aligned with core business strategy.
The biggest hurdles to overcome in terms of achieving net zero or similar climate ambitions are seen to be the complexity of decarbonizing supply chains ( cited by 25%of CEOs) and a lack of skills and expertise to successfully implement solutions (21%). Cost is seen as a lesser issue — cited by 11% of leaders, broadly the same as a year ago..
Increasingly, CEOs are recognizing the potential of AI to support their decarbonization and sustainability efforts. The top use cases include:
• Improving sustainability—related data quality and reporting (79%)
• Identifying opportunities for resource efficiency (79%)
• Reducing emissions and improving energy efficiency (78%)
Another priority is ESG reporting with half51% of leaders of corporate leaders saying they are prioritizing compliance and reporting standards to meet evolving investor and regulatory demands.
Two-thirds 65% of CEOs rsay that they have fully embedded sustainability into their business and believe it is critical to their long-term success. However, there is still work to be done when it comes to incorporating sustainability considerations into capital expenditure decisions, with only 29% saying that they are comprehensively integrated.
50% of Luxembourg CEOs are aligning sustainability goals with their core business strategy to demonstrate value to stakeholders.
85% have fully embedded sustainability into their business, recognizing it as critical to long-term success.
Only 40% of Luxembourg CEOs are confident about meeting 2030 net-zero targets, compared to 61% globally.
40% of Luxembourg CEOs comprehensively calculate and integrate both the costs and potential ROI of sustainability initiatives into major capital decisions.
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The 11th edition of the KPMG CEO Outlook, conducted with 1,350 CEOs between 5 August and 10 September 2025, provides unique insight into the mindset, strategies and planning tactics of CEOs.
All respondents oversee companies with annual revenues over US$500M and a third of the companies surveyed have more than US$10B in annual revenue. The survey included CEOs from 11 key markets (Australia, Canada, China, France, Germany, India, Italy, Japan, Spain, UK and US) and 12 key industry sectors (asset management, automotive, banking, consumer and retail, energy, infrastructure, healthcare, insurance, life sciences, manufacturing, technology, and telecommunications).
NOTE: some figures may not add up to 100 percent due to rounding.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. KPMG LLP does not provide legal services.
The information contained herein is not intended to be “written advice concerning one or more Federal tax matters” subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.
Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities.
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