Saturday, July 20, 2024

Business confidence overrides global financial turmoil- Grant Thornton

Botswana’s business confidence is resilient in the face of global financial turmoil, according to the Grant Thornton International Business Report (IBR) released last week.

The annual survey of privately held businesses shows that despite intense media coverage of the global financial crisis, 64 percent of businesses report feeling optimistic about the economic outlook for the next 12 months. This is only three percentage points lower than that reported in January 2007. Optimism in the United States has even gone up this year to 22 percent from 14 percent, despite the sub-prime mortgage crisis and resulting credit crunch.

When asked about specific business practices, survey respondents are positive about the future. Sixty-four percent of businesses globally expect turnover to increase over the next 12 months. Thirty-four per cent of businesses globally are expecting to raise their selling prices over the next twelve months. And twenty-two percent of businesses globally are expecting to increase exports, a two percent increase on 2007.

However, is the optimism of the surveyed global business leaders misplaced? .
Jay Ramesh, Managing Partner of Grant Thornton in Botswana, says: “The positive survey result is very encouraging after a period of very low activity in this part of the world. It reflects confidence that our region is set for growth. We can reasonably expect global attention to turn towards Africa more, especially to the Sub-Saharan African region.

“We have to monitor the consumption pattern in the economy and exercise restraint in non-productive spending that could lead to higher inflation, increase in interest rates etc.

Channelling resources into revenue generating projects and promoting the savings culture will bring about stability and positive trends in the economy,” he said.

The report further stated that confidence has increased 25 percent in Botswana, from 41 percent to 66 percent, which is well above the world’s average of 42 percent. Further, regarding farming, Botswana is the only country in the survey which recorded optimism for the next 12 months across all seven indicators. They are also the highest risers in optimism for profitability, investment in new buildings and investment in new machinery.

The economy is expanding at a strong pace and prospects for 2008 are good as the positive near-term outlook for diamond mining and cattle underpin expansion throughout the economy.
Countries which were surveyed included the wealthiest nations of Europe, North America and Asia.


Read this week's paper