Bangkok--14 Jan--Grant Thornton Grant Thornton
Businesses across the world expect weak increases in exports (a balance of +4%*), limited opportunities to increase revenues (+11%) and prices (+14%), but only a marginal drop in profitability (-5%) over the next 12 months. The global figures mask wide variations amongst different economies. The results come from the Grant Thornton International Business Report, which surveyed over 7,200 businesses across 36 economies.
For revenues, some continue to have high expectations with Vietnam at +91%, India (+71%) and South Africa and Armenia (both at +54%). Others fear the worst, with Hong Kong at -48%, Taiwan (-44%), Japan (-23%) and Spain (-21%). Thai business leaders responded negatively on revenues, with an overall balance of -14%, similar to their negative revenue perspective at the start of 2008. On export potential, Thai business leaders followed the pessimistic trend with a negative balance of -11% indicating that many do not expect any significant increase in exports during 2009.
Not surprisingly, around the world, the results show a significant downward trend on last year (even for economies still expecting revenue to rise), with a drop of over 50 percentage points from last year's global average for revenue expectations.
Regionally, the EU emerged as the gloomiest trading bloc with regard to revenues, with a balance of just +5% expecting revenues to rise, compared to the most positive, Latin America, at +30%. When asked about expectations for exports, however, the EU is the most optimistic at +11%, with Asia Pacific the most pessimistic, expecting no change from 2008.
“Revenue is driven by domestic sales and exports”, explained Peter Walker, Senior Partner of Business Consulting for Grant Thornton in Thailand. "Both of which are impacted by consumer demand and investment levels at home and abroad. Although the overall results of the survey are not surprising, the variation between companies and countries is quite interesting. It appears as if many businesses have not yet understood the impact of the recession on their markets and are hoping for a magic turnaround early in the year. For example, businesses in 26 out of 36 countries surveyed, expect their exports to rise, but with the largest importing economies contracting, the question is where those export markets are going to be found.”
“The combined survey responses of Thai business leaders, through reflecting the general pessimism caused by local politics and the global economic environment, is probably realistic and should enable them to make appropriate plans for the year.”
“Our advice to businesses in the short term is to focus on cost-cutting, productivity improvements and maintaining strong customer relationships. Decisions around strengthening the balance sheet should follow close behind as businesses prepare for an upturn in the economic climate. Businesses should also be alert for opportunities to buy distressed assets at a bargain price, but only when it fits with long term strategic objectives. Using the quiet business environment to strengthen capabilities (e.g. staff training) might also be a good investment for the future.”
“No one can predict when the upturn will arrive, but we can be sure that the new commercial environment will look very different. The key is to have a plan that is continuously reviewed and adjusted as circumstances change.”
The Grant Thornton International Business Report is an annual survey of the views of senior executives in privately held businesses all over the world. Launched in 1992 in nine European countries the report now surveys over 7,200 Businesses in 36 economies providing territory, regional and global trend data on the economic and commercial issues affecting a sector often described as the 'engine' of the world's economy. Data for eight key industry sectors will be available for the first time in 2009. The research is conducted by Experian Business Strategies Ltd. Grant Thornton International donates US$5 to UNICEF for every completed IBR questionnaire, a donation of over US$39,000 in 2008.
To find out more about IBR, to obtain IBR reports, or to take part in an online version of the survey that compares your responses to the global survey results, please visit www.internationalbusinessreport.com. This press release can also be downloaded at www.grantthornton.co.th/press.
About Grant Thornton in Thailand:
Grant Thornton in Thailand is well recognized by the business community as one of the leading professional service firms in Thailand and has been in Thailand since 1991. We helped many clients successfully navigate the Asian economic crisis of the late 1990s, applying a mixture of techniques, including debt restructuring, cost cutting and business plan revision. We have also helped many clients realise acquisition and expansion opportunities.
Our services include business consulting, external and internal auditing service, domestic and international tax planning, corporate finance advisory, restructuring and reorganization, merger and acquisition, executive recruitment, succession planning and remuneration planning. To learn more about our firm, please visit our web site: www.grantthornton.co.th
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Peter Walker Lakpilai Worasaphya
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