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 heir 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 Botswana, South Africa, mainland China, Singapore, Canada and Hong Kong (which showed the biggest swing of sentiment from 2009) at +60% or higher.
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.
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 said the survey 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. 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,” MacBeath said.
The survey also found that expectations of increased revenues in 2010 came out highest (at +40%) when respondents were asked to rank likely business trends in 2010.
Increased turnover was followed by the surprisingly positive view that investment in plant and machinery (+31%) and profitability (+29%) would both increase.
Businesses were much less hopeful about selling prices with 21 out of 36 economies less optimistic about increasing their prices than they were in 2009.
Jay Ramesh Managing Partner of Grant Thornton in Botswana said it is heartening to see the continued optimism of the business community of Botswana.
He added that it appears that most businesses in the non-mining sector have positioned themselves well for better business opportunities in the current year as compared to 2009.
“With the mining sector on the path to recovery during 2010, a better implementation schedule by the government ministries should keep the private sector busy,” said Ramesh.
“Though there is speculation that government has cut back heavily on budgets to reduce the budget deficit, the efficiency of project implementation by government is the key for growth during current year.”