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Mid-market businesses

Mid-market businesses lifted by rising tide of optimism

Optimism among global mid-market business leaders rose from 59% to 67% in the first half of this year, according to the latest data from Grant Thornton’s International Business Report (IBR). Although the worldwide numbers hide significant regional variation, every region has an improved outlook compared to where they were last year. 

The global growth in optimism has been fuelled by firms expecting increases in both revenue and profits, while concerns about a global recession have, for now, retreated. This may, in part, be due to inflation, rather than meaningful growth. Nevertheless, the improved numbers are making firms more confident about the year ahead.

The biggest increase in optimism has been among mid-market firms in EMEA, where optimism has jumped by 11%.  Energy prices are down and inflation is easing, which gives reason to believe euro area economies have adjusted to the economic shock[1]. Now, more than half (56%) of business leaders in the region are optimistic, up from 45% last year. In Asia-Pacific the proportion of leaders who are optimistic about their businesses has risen from 57% to 67%, and in Latin America the figure has gone up from 60% to 65%. Mid-market firms in North America remain the most optimistic, increasing from 71% to 74% in the first half of 2023.

While more than half of business leaders saw inflation as the key threat to their prospects in the latter stages of last year, measures by central banks and governments to reduce inflation have managed to reassure business leaders in most territories.[2] [3] Added to this, employment levels have remained robust, and the shocks to global trade caused by the Russian invasion of Ukraine have largely been surmounted, as firms adapted and reshaped their global supply chains.

The mid-market: Smiling in the face of adversity

Firms are not complacent though, and good leaders know that they need to constantly be alert and adapt to a continuous flow of new business challenges. This includes navigating the emergence of new technologies, ensuring that business operations can benefit from innovations such as AI, and responding to the growing expectations for firms to address ESG concerns throughout their organisation and supply chains.

Added to this, economic risks still weigh on business leaders’ minds. Globally, the number of firms who feel economic uncertainty is constraining their business has fallen by 2 pp to 58%, slightly down but still at relatively high levels. With significantly more than half of business leaders concerned about economic uncertainty, it’s clear that economic risks remain much higher than pre-pandemic norms when there were typically closer to a third of mid-market firms seeing this as a constraint. Likewise, anxieties about energy costs remain. In the last six months, the proportion of businesses identifying energy costs as a constraint has fallen by six percentage points to 54%, but this is still high compared to a pre-pandemic average of 38%.

The number of firms citing economic uncertainty as a constraint has also fallen slightly or flat-lined in most regions. However, in China it has seen a minor increase, from 61% to 62%. The slightly raised anxiety of Chinese firms underlines the challenges facing the world’s second largest economy, which is struggling to overcome a property market slowdown, reduction in consumer demand and growing youth unemployment.[4]

More broadly though, the optimistic outlook of firms indicates confidence in business fundamentals and bodes well for continued growth in the mid-market.


Business leaders have had to learn to be extremely resilient over the last several years and are now in a good place to push for growth. Those firms that survived the pandemic have had to become adaptable, so that they can find ways to succeed despite wider economic pressures. Agile firms, led by business leaders with a clear strategy and the latest management information, have good reason for optimism.

Five sectors anticipating growth 

Travel and tourism, and manufacturing

Optimism is up across the board, but there are some sectors which feel particularly positive. Firms in the travel and tourism sector were among the hardest hit by the pandemic, as travel restrictions made tourism largely impossible. The sector only partially recovered in 2021 and 2022 but has since seen its optimism figures rebound. At the end of 2022, just under half (48%) of mid-market firms in this sector were optimistic about their prospects. Now, two in every three firms (66%) are optimistic.

Likewise, two in three (66%) mid-market firms in the manufacturing sector are optimistic about the year ahead. This is up 10 percentage points compared to the last set of data from the end of 2022. The positivity among these firms will reflect stabilising energy costs and confidence in the robustness of supply chains, and their ability to create additional value here, as trade disruptions ease. At the same time, firms that are able to benefit from increased investment in clean tech, such as semiconductors, electric vehicles, batteries and solar and wind parts, will be feeling more upbeat given significant investment in these technologies. For example, in the US, the IRA and the Chips Act have prompted a $220bn cleantech project boom, with more than 110 large-scale manufacturing announcements.[5] While other regions may find it difficult to compete with the scale of funding seen in the US, mid-market firms in these industries will benefit from increased investment around the world[6].

Oil and gas

The oil and gas industry, however, is the most optimistic, with a startling 86% of mid-market firms feeling positive about their prospects for the year ahead, up 30% from last half. The sector’s optimistic outlook follows a period of bumper profits caused by shifts in the energy sector. However, this has also brought about increased scrutiny, especially considering concerns about consumers’ energy bills, and there will be greater interest in how these firms invest the profits they’ve made, with expectations that it should be used for new projects, including clean energy.

“We have experienced consistently higher prices of oil and gas in the last twelve to eighteen months, maybe longer. As a result, you're seeing mid-market energy companies with greater confidence in their deployment of capital, reinvestment, and hiring people. They can plan with confidence a number of different activities, all aligned with their strategy for the future.

“So, I think that is really the backstory to the optimism in the energy sector right now. Prices have been very good relative to historic levels. That allows mid-market energy to invest in a range of activity to advance their businesses and to generate profits and returns for investors.” - Bryan Benoit, Global head of energy and natural resources and Global co-leader valuation services, Grant Thornton US 

Financial services

Emerging from the post-pandemic rebound, the financial services sector continues to show high levels of optimism, with 74% of firms positive about their outlook, up from the 70% reported six months ago. The growth in optimism is likely to have been prompted by increased interest rates leading to greater returns. Equally, rate changes will be acting as a catalyst, motivating consumers and businesses to revisit their investments and funding structures, creating new opportunities for financial services firms. Rate rises have also had repercussions for consumers though, which is drawing greater attention to firms’ stated commitments to protecting their customers.

Adding to the positive picture for mid-market financial services firms, they are also less concerned about economic uncertainty than they have been in a while, with 58% of firms seeing it as a constraint to their business, materially down from 73% last year.

Technology, media and telecoms

Similarly, optimism in the tech, media and telecoms sector has not fallen much since a peak of 77% in the first six months of 2021, now at 73% in the first half of 2023.

“The technology, media and telecommunications sector is, by its very nature, more disruptive than many other industries. Tech leaders and entrepreneurs are generally more comfortable with a faster pace of change. And also, the sector attracts the kind of people who are inherently more optimistic. They place bigger bets and have more appetite for risk.

“The big concern for many mid-market firms in the industry is being too reliant on funding and financing. But, much of that funding tends to be balanced more towards equity than debt. So some of these firms may have been hit less by interest rates when compared to other sectors.

“In the end, business leaders in tech are likely to be optimistic because they know that they have the products and skills that clients need. While so many other industries face existential risks to their business models, tech continues to disrupt and to grow. The development of AI is only going to accelerate that.” - Nick Watson, Partner, Global head of technology, Grant Thornton UK  

“Big tech players are going to be subject to more regulation going forward across Europe and in the US. They will have to be more open and stop some of the anti-competitive practices that they have used to stifle smaller firms up to now. It should allow other businesses to gain market share and have access to the customer base of the tech giants in a way they haven’t before.

“This offers big opportunities for mid-market firms in this sector. Hopefully if you can regulate that supply chain, you can get more innovation and entrepreneurialism. More regulation on some of the bigger giants might make it easier for others to gain entry, access those customers, those markets and do business.” - Schellion Horn, Partner, Economic consulting, Grant Thornton UK

How optimistic firms build on success

The latest IBR data gives an insight into which businesses are most likely to be optimistic about their prospects for the year ahead. Business leaders who are optimistic are those who lead firms which have performed well over the last twelve months. The mid-market firms that have a global outlook and have managed to negotiate recent economic turbulence will be key in helping to drive global recovery in the long term.

Firms that are optimistic about their outlook, are also much more likely to have positive expectations across the business trends measured. Not only do they expect increases in revenue and profitability, but they also expect to increase their exports, increase investment in IT and skills, and increase staffing levels.

Successful firms have managed to weather recent economic shocks and maintained growth despite difficult market conditions. Their optimism levels have increased as wider concerns about potential recession have withdrawn. Now they are in a position to drive growth despite lingering economic uncertainty.

A few things that the best business leaders do

“There’s no secret sauce to success, but there are a few things that the best business leaders do, and which I would recommend to any mid-market firm.

“The foremost of these is to focus relentlessly on delivering for your customers and do it well, without getting distracted on any and everything. Next on the list is to be constantly reviewing your operations with the aim of creating efficiencies. Whether that be in the back office, manufacturing, or in your supply chains, there must be an ongoing drive to remove unnecessary costs.

“Another component that the best business leaders spend a lot of time on is their people. Getting the right minds in the room to help you deliver growth is vital. With the growth of automation and AI, this is only going to become more important, as firms need to consider how they can recruit and retrain their people so that they have the skills to make the most of new tech.

“The final element is timing. Business leaders need to have the courage to invest and go for growth, but they need to do it at the most advantageous time. And to understand that, leaders need the right data, the right management info and the right advice.” - Deepankar Sanwalka, Senior partner, Grant Thornton Bharat

The optimistic mid-market plans for growth

Mid-market firms are confident about their business prospects in 2023. Business leaders are finding ways to succeed and grow despite economic headwinds and uncertainty. They have learnt to adapt to new challenges, and feel able to negotiate changes in the business landscape, including the arrival of AI and increasing demands of ESG.

“Five years ago, or even further back than that, very inexpensive sources of capital were available. And if firms had problems, they could always refinance. However, over the last several years, executives at mid-market companies have been tested. They've had some tough experiences, but they have also had opportunities to put their talents and ideas into motion, and to get creative.

“So, the answer is no longer just to pull on the big lever of inexpensive capital. Now firms have to actually think through what they can do with what's available to them. Executives in the mid-market have been tested, and they have emerged from this even more capable and accomplished and resilient than ever before.” - Bryan Benoit, Global head of energy and natural resources and Global co-leader valuation services, Grant Thornton US

Firms have managed to navigate the worst of the economic uncertainty and are now in a position to make the most of emerging opportunities for growth. The leaders of these firms will be looking to understand the areas in which they should be investing in order to maintain trajectory.

In the face of significant challenges the global economy has proved remarkably resilient.[7] Recent forecasts from the IMF[8] now point to slowing rates of global growth, with advanced economies feeling the effects to a greater extent than their developing economy counterparts. Mid-market businesses with strong foundations and clear strategies will be well placed to navigate these challenging markets. Companies will need to work harder (and smarter) to compete and achieve future growth, and key to this will be identifying the right investments to make. Mid-market firms report that they’re ready to step up investment in tech and skills to continue to build their brand and grow their business. These investments, along with the tenacity demonstrated by the mid-market, will be key to helping drive economic recovery. Accounting for 90% of all businesses and 50% of employment, small and mid-market firms make up the largest part of the global economy[9]. The fact that leaders in the mid-market are so optimistic about their prospects is a positive sign not just for them, but also for economic development internationally and bodes well for global growth.

“Businesses should be thinking about how they can strengthen connections with their lenders and make decisions now to make them as attractive as possible to continue accessing the capital they need in the future. They're aware that they've got to keep attacking those markets, because if they retreat, there's only one way to go. They are investing very mindfully, making sure they've got the finance in place to weather any turbulence, but also to continue with necessary essential investment that allows them to come out strong the other end. Depending on the ambition of the firm, this will include investing in international markets, skills development and technology, and making sure that they are positioned to access international growth.” - Schellion Horn, Partner, Economic consulting, Grant Thornton UK

Top three takeaways for business leaders

·        Focus on the essentials. Firms that know their business well and are confident that they consistently deliver for customers will be best placed to build on that success.

·        People make businesses. Every business leader needs to build a team around them of talented individuals who have the skills and ability to drive results.

·        Timing is everything. Firms need to push for growth when the opportunities are available. To understand this, they need the right data, the right management info and the right advice.