Bangkok--Jan 11--Grant Thornton
Business owners in the US and UK show dramatic falls in confidence
Powerhouses of the '60s-'80s, Japan and Germany, show major rise in optimism
Thailand business leaders are less optimistic than Asian neighbours
The first results from the 2006 Grant Thornton International Business Owners Survey (IBOS) conducted in 30 countries around the world and published today (11 January 2006), show a marked shift in the mood of businesses leaders around the globe and a shift in optimism about the economy away from the robust performers of recent years, such as the US and the UK.
The confidence of business owners in the US regarding the economy has dropped by nearly half from an optimism / pessimism balance (*see note below) of +62 to +32 in one year; and in the UK the fall has been dramatic, dropping from +46 to just +8. By contrast, the economic powerhouses of the '60s-'80s, Japan and Germany, show dramatic improvements in confidence. Germany’s balance this year is +41, up from +17, -6 and -37 in previous years; and Japan, although still negative at -14, may be on the cusp of a serious revival in confidence having improved from balances of -27, -46 and -71 over the last three years.
The International Business Owners Survey, now in its forth year globally, was conducted in Thailand for the first time this year, sponsored by Grant Thornton Thailand. The results from business owners in Thailand indicate a relatively low level of optimism, scoring just 9%, against an East Asian region average of 42%. Some neighbouring countries demonstrated much greater business outlook confidence, including Singapore at 64% and Malaysia at 36%. As this is the first time the survey has been run here, there is no previous data to compare against so it is not possible to confirm the perception that business confidence has fallen somewhat in recent years. Mr Peter Walker, partner of Grant Thornton Thailand, suggests that, “During the survey period, a number of issues, including bird flu, the sluggish post-tsunami tourism recovery, civil unrest in southern provinces, rising oil prices and the continual bickering between the press and government led to reduced business confidence”.
Globally, the survey shows that businesses in 26 out of 30 countries are optimistic about their economy's performance. And in 13 countries optimism has actually improved over the last year. However, in a range of major G8 economies including the US, Canada, UK, France and Italy, the mood now is certainly less confident. Four of the biggest drops in confidence in the whole survey are in G8 countries.
Said Jim Rogers, of Grant Thornton: "This has been a year of uncertainty in some of the world’s largest economies. Although all the hard economic growth indicators continue to be positive, there is an increased mood of pessimism, which is hitting confidence. Whether it is the ongoing legacy of the Iraq conflict in the US and UK; hurricanes in the US; racial tensions and unrest in France, social and political events certainly appear to have impacted the mood of the business world.
Some former powerhouses of the '60s '70s and '80s, though, such as Japan and Germany appear to be significantly more confident about their prospects. And the big winners of recent years — the major new economic powers of the emerging world, China and India, continue to soar in economic confidence."
The most optimistic business owners of all, for the third year, are in India with an optimism/pessimism balance of +93 (+88, +83 and +25 in the previous three surveys); and in China, where business owners also took part in the survey for the first time, the confidence score was a balance of +77.
Jim Maurer, partner from Grant Thornton in the US said: "Although businesses continue to do well in the U.S. as evidenced by the strong GNP, there was definitely a different mood about the economy in November when a large part of this survey was taken. From pre-election problems in Iraq, to the hurricanes and worries about oil prices, business people were feeling more cautious."
"Along with this caution, U.S. business leaders are still optimistic citing the economic resiliency that has occurred in the face of other significant setbacks."
Echoing that sentiment, Graeme Forbes, a partner from the UK said: "In the UK, higher interest rates and taxes have reduced disposable income and consumer spending has slowed more abruptly than expected. Economic growth has slowed to its slowest since 1992 and optimism has fallen sharply. The UK confidence figure is actually below the overall EU figure for the first time for many years."
Vishesh Chandiok, International Practice Partner, Grant Thornton, India comments: "India's business owners continue to thrive and remain very optimistic. There are no signs of a slowdown in the economy. The growing reliance on the private sector and trade liberalisation — here, just like in China — is proving fruitful for medium-sized enterprises who are taking full advantage and thriving as a result."
Mr Ian Pascoe, Managing Partner of Grant Thornton Thailand, opines that, “Thailand, being a relatively smaller economic player, often suffers from a lack of optimism and is buffeted by both local issues and the effects of global economic disturbances. The business community must continue to encourage the government to minimize the impact of local political issues, providing a level and open playing field. Thailand’s assets include an entrepreneurial population, abundant natural resources and a wonderful life style and, if these strengths are promoted and supported, the country will continue to be a great place to do business.”
* The figure is the percentage balance of the respondents who are optimistic and those who are pessimistic.
Notes to editors
The Grant Thornton International Business Owners Survey (IBOS) was carried out among more than 7,000 business owners from 30 countries during late 2005. IBOS began in 2002 and builds on the European Business Survey (EBS) which Grant Thornton ran from 1993 to 2001. The research was conducted by Experian Business Strategies Limited and Harris Interactive. In addition to the confidence / optimism question, a broad range of issues were surveyed. Other issues will be analysed and communicated over the next few months.
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