Bangkok--5 Jan--Grant Thornton
Optimism among businesses around the world has bounced back to give the Grant Thornton global optimism/pessimism index for 2010 a positive optimism balance* of +24%, compared to its lowest ever score of negative -16% this time last year. The International Business Report (IBR) survey of over 7,400 businesses across 36 economies, now in its 18th year, shows Thailand returning to a slightly positive level of business optimism, up to +12% optimism this year from -64% in 2009 and -30% in 2008.
Businesses in Chile, India, Australia, Vietnam and Brazil are the most optimistic in the world, all scoring over +70% (see figure 1). 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. At the bottom, Spain (-56%) and Japan (-72%) kept their places as the most pessimistic economies in the world, although even their figures were slightly up on last year.
When compared to the IMF's GDP figures for 2009, economies that avoided the worse impact of the recession (for example, Australia, 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 this year’s optimism 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
Thailand experienced a deep recession but forecasts are for a strong recovery over the next few quarters. The IBR survey results reflect that forecast, with optimism swinging from very negative last year to a slightly positive 12% this year. Figure 2 indicates that Thailand’s business leaders are slightly more pessimistic than GDP forecasts suggest.
Ian Pascoe, managing partner of Grant Thornton in Thailand, comments, “The question for Thailand is whether this renewed optimism can be turned into reality in the Kingdom’s complex political environment. While Thailand’s strengths include in-demand export products and services, the country also needs a confident domestic market and foreign direct investment, all of which can be negatively impacted by political instability.”
When respondents were asked to rank likely business trends in 2010, the survey found that expectations of increased revenues in 2010 came out highest (at +40%), followed by the surprisingly positive view that investment in plant and machinery (+31%) and profitability (+29%) would both increase. Thai business respondents are more positive than last year on all business trends, with positive +39% optimism for revenue increases and +30% optimism for profit increases. Although positive, Thai business leader’s predictions on plant and machinery investment at +17%, lag behind regional and global averages.
Ian Pascoe comments, “These survey results 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.”
When asked about employment expectations in 2010, European businesses were far more pessimistic than their counterparts elsewhere in the world; a negative balance of -1% in Europe compared to balances of +33% and +42% in Asia Pacific and Latin America respectively. At +28% positive, Thailand stands ahead of the world average (+20%) for employment expectations but somewhat behind the Asia Pacific average of +33%.
Mr. Pascoe concluded, “As the geographies covered in this survey contribute 81% of global GDP, the global business community should be encouraged by the results of this survey.
Many people blamed globalisation for the speed of the downturn but we are now seeing that globalisation may also help the world accelerate out of recession. This survey suggests that businesses in the giant emerging markets of China, India and Brazil are confident that they can help to pull the rest of the world back into growth. Businesses in many other economies are equally optimistic that they have survived this recession and are well placed to help drive the upturn, and see their business grow as a result. Governments will hope such optimism is well founded.”
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
Further enquiries, please contact:
Ian Pascoe Lakpilai Worasaphya
Managing Partner Senior Manager, Marketing and Communications
Grant Thornton Grant Thornton
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