Bangkok--5 Jan--Grant Thornton in Thailand
Optimism amongst businesses around the world has slumped by 56% in the last 12 months and pushed the Grant Thornton International optimism/pessimism barometer to a record negative balance of -16% compared to +40% this time last year. It is the first time pessimists have outweighed optimists about the outlook for their economy since the research began in 2003 but this year's International Business Report, which surveyed senior executives from over 7,000 businesses across 36 economies, also shows an overwhelming consensus that falling consumer demand is the biggest threat to businesses. There are also some startling differences in attitude towards the economic crisis between the mature and emerging economies.
Of the four largest trading nations, businesses in the United States and mainland China, who together contribute over 32% of global GDP1, scored their optimism at -34% in the United States but +30% in mainland China. Similarly, Japan and India (collectively contributing over 11% of global GDP) scored their optimism at -85% and +83% respectively.
"These polarised results suggest there are still pockets of hope in the global marketplace," explained Peter Walker, partner of Grant Thornton’s business consulting in Thailand, "While all businesses are preparing for a prolonged and painful downturn, those in the emerging economies realise that it could offer real opportunities."
Despite the pessimism, the survey found businesses from 11 countries remained optimistic about the outlook for their economies, with India (+83%), Botswana (+81%) and Brazil (+50%) heading the list. Japan (-85%) and Spain (-65%) were the most pessimistic. The biggest swing in sentiment was in Hong Kong, which went from +81% optimistic last year to -49%, a factor of its exposure not only as one of the hard hit financial services centres but also of its close trading links with both the East and the West.
Regionally, the European Union emerged as the most pessimistic trading block at -38% on the optimism/pessimism barometer. Latin America (+11%) and Asia Pacific (+3%) both recorded optimistic scores, albeit down on last year.
Thailand’s level of business leaders optimism continued its downward trend, falling from +30% in 2007, through -30% in 2008 to -64% at the beginning of 2009. Only Japan and Spain have a lower level of optimism. Peter Walker opined, “This fall is not surprising given the double-whammy of the global economic woes and local political instability. The survey was conducted just after the airport closures, when the nationwide economic mood was at an all time low.”
When asked to identify the single factor causing most concern for their business, businesses in 33 out of the 36 countries cited a fall in consumer demand with a shortage of business credit a secondary concern. In Thailand, falling consumer demand far outweighed all other business leader’s concerns. Peter Walker added, "If government leaders were in any doubt about the need to take steps to boost consumer spending and kick start the economy with some infrastructure investments, this overwhelming consensus from the businesses surveyed should surely persuade them."
Peter Walker concluded by adding, "It is easy to become stalled by the continuing waves of bad economic and political news. However, times like these require strong, clear leadership. We're telling our clients to take swift, decisive action to defend their businesses in the short term but to hold their nerve and develop a strategic plan for the long term. Recessions are a good time to utilise excess capacity to strengthen capabilities in preparation for the eventual upturn. Businesses that make smart moves now will emerge as the leaders of the future. In the not-so-distant future, the economy will recover and a new commercial environment will emerge but it could look very different to the current one."
Further enquiries, please contact:
Peter Walker
Senior Partner
Grant Thornton
T: 02 205 8250
E: [email protected]
Lakpilai Worasaphya
Senior Manager, Marketing and Communications Grant Thornton
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Christine Hobart
International communications manager
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