Optimism bounces back amongst businesses around the world
Optimism amongst privately held businesses (PHBs) around the world has bounced back to give the Grant Thornton global optimism/pessimism index for 2010 an optimism balance* of +24%, compared to its lowest ever score of -16% this time last year. The International Business Report (IBR) survey of over 7,400 PHBs across 36 economies, now in its 18th year, also highlights a group of ten economies where businesses are more optimistic about the outlook for their economies than International Monetary Fund (IMF) forecasts might suggest.
Businesses in Chile, India, Australia, Vietnam and Brazil are the most optimistic in the world, all scoring over +70%. Close behind are South Africa, mainland China, Singapore, Canada and Hong Kong (which showed the biggest swing of sentiment from 2009) at +60% or higher (see figure 1). At the other end of the scale, many eurozone countries remain pessimistic about the future; Italy, Denmark, Finland and France all scored +9% or lower with Greece (-23%) and Ireland (-42%) even more gloomy. Spain (-56%) and Japan (-72%) kept their places as the most pessimistic economies in the world, although even here the figures were slightly up on last year.
When compared to the IMF's GDP figures for 2009, economies that avoided recession (for example, Australia, mainland China, India and Vietnam) or suffered a relatively minor recession (such as Brazil, Hong Kong, Canada and New Zealand) all feature, not surprisingly, at the top of the league table.
Against the IMF’s GDP forecasts for 2010, however, an interesting picture emerges, with businesses in places as geographically diverse as Australia, New Zealand, Canada, Malaysia and Germany recording disproportionately higher optimism than might be expected (see figure 2).
Alex MacBeath, global head of markets at Grant Thornton International, comments, “The question is whether businesses in these economies can forecast their future more accurately than the IMF. Many governments, on reading these results, will hope their business community is right and that their GDP in 2010 will outstrip IMF forecasts as a result.”
Alex MacBeath comments, “This suggests that during the recession businesses have become leaner and more cost effective which may enable them to lower prices while still securing increased revenues and, crucially, profits. As the global economy emerges from recession, we are likely to see many businesses reaping the rewards of recession induced efficiencies to lead the way in the upturn."
When asked about employment expectations in 2010, European businesses were far more pessimistic than their counterparts elsewhere in the world; a negative balance of -1% in Europe compared to balances of +33% and +42% in Asia Pacific and Latin America respectively. All countries who recorded negative balances for employment were European, led by Ireland, Italy (both -14%), France (-10%) and Spain (-8%).
Alex MacBeath adds, “Privately held businesses contribute 81% of global GDP, and the global business community should be encouraged by the results of this survey.
“Many people blamed globalisation for the speed of the downturn but we are now seeing that globalisation may also help us accelerate out of recession. This survey suggests that businesses in the giant emerging markets of mainland China, India and Brazil are confident that they can help to pull the rest of the world back into growth and businesses in many other economies are equally optimistic (in some cases more optimistic than they have been for years) that they have not only survived this recession but are well placed to help drive the upturn, and see their business grow as a result. European governments, in particular, will hope such optimism is well founded.”
For further information please contact:
Christine Hobart
International communications manager
Grant Thornton International
T: +44 (0)207 391 9548
M: +44 (0) 79 0005 2240
E: christine.hobart@gtuk.com
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