BUSINESS chiefs are closing the year on an optimistic note as the latest IBEC business sentiment survey shows confidence is improving.
The study found that the outlook for exports rose significantly and while domestic sales expectations remain modest, they are much better than the same time last year.
IBEC chief economist Fergal O'Brien said that despite a tough Budget, business was positive about the year ahead.
"The domestic economy is weak, but there are increasing signs of stabilisation in consumer spending and housing, while business investment in machinery and equipment is growing robustly," Mr O'Brien said.
"We still face many economic challenges, but we can look to 2013 with a renewed sense of optimism.
"Weak growth in Europe and a fragile domestic economy remain the big worries for 2013. Unless we see progress on both these fronts, we will not tackle the unemployment crisis," he added.
Key trends highlighted in the survey include:
• The final quarter saw an improvement in CEOs' assessment of their own business, both the current state and future outlook.
• Confidence in the overall business environment improved slightly in the final quarter but remains weak.
• Export expectations rebounded to +33 from +12 in the third quarter and +29 at the end of 2011. The shift is driven by improved expectations across a range of sectors, but especially those where sales forecasts had softened in the middle of the year.
Mr O'Brien said that exports had slowed since the start of the year because of difficult trading conditions in Europe, but that 2012 would be a "record year".
"The exporting sector is driving the recovery and this strong performance is set to continue in 2013," he said.
"The challenge is to ensure this success is replicated in the other parts of the economy.
"A deal on Irish debt at a European level would help both consumer and business confidence enormously."