Johannesburg - South African privately held
businesses (PHBs) are hopeful that the worst of the recession is behind them as
the 2010 Grant Thornton global optimism/pessimism index indicates an optimism
balance of +60% compared to +35% this time last year.
An "optimism balance" is the proportion of businesses reporting they are
optimistic less those reporting they are pessimistic.
"SA business owners are certainly looking with renewed optimism towards the
coming 2010 Fifa World Cup year and its associated rewards," says Leonard
Brehm, national chairperson of Grant Thornton South Africa.
The International Business Report (IBR) survey of over 7 400 PHBs across 36
economies, now in its 8th year, also highlights that South Africa expects the
turnaround post-recession to occur a lot earlier than most other countries.
The IBR statistics indicate that 26% of SA PHB owners expect an upturn
during the first half of 2010, with 33% expecting the upturn to take place in
the second half of the year - most likely as a direct result of the 2010 Fifa
World Cup event in June and July. In comparison, global statistics indicate a
turnaround during the second half of 2010 (34%) or only during 2011 (23%).
Optimism amongst PHBs around the world has bounced back to give the Grant
Thornton global optimism/pessimism index for 2010 an overall optimism balance
of +24%, compared to its lowest ever score of -16% this time last year.
Businesses in Chile, India, Australia, Vietnam and Brazil are the most
optimistic in the world, all scoring over +70%. Close behind are South Africa,
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 -10% or lower.
"In addition," says Brehm, "the 2010 IBR survey indicates a group of ten
economies - which includes South Africa - where businesses are more optimistic
about the outlook for their economies than International Monetary Fund (IMF)
forecasts might suggest."
Businesses in places as geographically diverse as Australia, New Zealand,
Canada, Malaysia and Germany recorded disproportionately higher optimism than
might be expected.
"Many governments, on reading these results, will hope their business
community is right and that their GDP in 2010 will outstrip IMF forecasts,"
continues Brehm. "This is especially because privately held businesses
contribute 81% of global GDP. The global business community should be
encouraged by the results of this survey."
"South African specific data found that expectations of increased revenues
in 2010 once again surpassed global trends with a +60% optimism balance,
compared to global's +40% figure," says Brehm. Of all trends highlighted,
global PHBs expectations of increased revenue came out highest.
Reaping the rewards
PHBs in South Africa also believe that profitability (+44%) and investment
in plant and machinery (+37%) will both increase. Global figures for
profitability (+29%) and investment in plant and machinery (+31%) also
indicated increases.
Businesses were much less hopeful about selling prices with 21 out of 36
economies, including South Africa, less optimistic about increasing their
prices than they were in 2009. Brehm comments: "This 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."
South Africa's employment optimism data indicates a +25% increase, compared
to the global number of +20%. 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. All countries which recorded negative balances for employment
were European, led by Ireland and Italy (both -14%).
"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. 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 not only survived this
recession but are well placed to help drive the upturn, and see their business
grow as a result," concludes Brehm.
- I-Net Bridge