Johannesburg - Businesses are continuing to cut costs and focus on
efficiencies, a survey of leading executives across Europe and the
Middle East has shown.
Released on Monday, KPMG's Business Leaders Survey polled almost 3 000 senior executives in 31 countries.
It found businesses were doing this in the face of
persistent uncertainty over the global economy and the future of the eurozone.
"In South Africa, the challenges that businesses face
in attempting to respond to the sustained impacts of the global economic
crisis do not differ that much from those faced by businesses in more
developed markets," KPMG director David Friedland said in a statement.
According to the survey, the top four challenges
experienced in South Africa were exploiting growth opportunities through
transactions, looking for growth in emerging markets, altering business
models to realise cost efficiencies, and embedding an element of
sustainability in business models.
Frank Blackmore, senior economist for KPMG, said
economic growth in South Africa slowed to around 2% in real
terms between 2008 and 2010, in line with the slump in global demand.
This slowdown was on the back of constrained
international demand and lower commodity prices as a result of the
global financial crisis.
"Business' subsequent reaction to the emergence of the
recession was, predictably, to focus on the careful management of cash
and costs and this area has remained important to business in 2011."
Friedland said that with the eurozone being South
Africa's largest trading partner, the prevailing sovereign debt had
reduced demand for South Africa's goods.
He said this substantiated the shift in focus for South
African businesses toward creating sustainable and adaptable business
models to react to the current market conditions.
"Although another global recession seems unlikely at
this point, Europe's current financial crisis will continue to adversely
affect world economic growth, particularly in emerging market economies
such as South Africa," said Friedman.
The current situation has to some extent driven away
potential and existing investors from perceived riskier emerging market
"However, forecasts by the International Monetary Fund
indicate that emerging market economies will outperform developed
economies in the medium term as lower interest rates will favour
investment in these regions.
"Considering the potential areas for investment, which
emerging economies present, it comes as no surprise that 30% of
the business leaders survey respondents suggest shifting their focus to
investment in emerging markets," said Friedman.
Blackmore said South Africa's standing as an emerging
economy, coupled with an abundant supply of natural resources and
well-developed financial, communications, energy, and transport sectors,
provided a stable platform for future economic growth.
"The country's inclusion in the Bric (Brazil, Russia,
India and China) economies substantiates its growth potential and
further increases its reputation as a globally competitive destination
for foreign investment."