Hopes for a strong start to economic recovery in 2013 look to be diminishing as business confidence in mature economies continues to fall away.
The latest data from the Grant Thornton International Business Report (IBR), a survey of 3,200 business leaders in 44 economies, suggests economic uncertainty caused by concerns over the United States ‘fiscal cliff’ and ongoing fears over the long-term viability of the Eurozone is dampening growth prospects.
The IBR reveals that global business optimism stands at just net 4 percent heading into the New Year. This halts a rally in confidence seen in the first half of 2012, when global business optimism reached 23 percent, and brings it nearer to the 0 percent level observed this time last year.
According to the findings, Botswana has also seen a decrease in business optimism in the last quarter (Q4) of 2012 by 50 basis points, from the 84 percent, which was recorded in quarter three (Q3) to 34 percent. A year on, the same indicator had increased to 50 percent in 2012 from the 38 percent recorded in 2011. At 34 percent in Q4, Botswana is currently in position 16 and its neighbouring South Africa stands at position 14.
The findings show that in the last quarter, business optimism in South Africa also decreased from 43 percent in Q3 to 38 percent, the data reveals that between 2011 and 2012,business optimism in SA reduced by 9 basis points that is from 58 percent in 2011 to 49 percent in 2012. Countries that lead the ranks in business optimism in Q4 are the United Arab Emirates at 88 percent, Peru 86 percent and Georgia at 84 percent.
Generally, Botswana shows a slight decrease in economic indicators such as revenue, employment, selling price and exports in 2012 compared to 2011. The report suggests that the leading constraining factors are a lack of skilled manpower, regulations/red tape, and reduced demand.
Other factors include transport infrastructure, shortage of long term finance and ICT infrastructure. However, 41.5 percent of businesses expected finances to be more accessible in the New Year, with 76 percent believing that the lenders are supportive in lending them money.
With regards to the fall in business optimism, CEO of Grant Thornton International Ed Nusbaum said, “There is no question that protracted negotiations over how to resolve both the sovereign debt crisis in the euro zone and the fiscal cliff in the United States have weighed heavily on business confidence over the past six months. With the economic outlook clouded by these issues, business investment becomes a much riskier proposition for many.
“The hope, both in the United States and around the world, is that these issues can be resolved and that this drop in confidence is temporary rather than the start of a longer decline.”
