Grand Thornton: despite slumping optimism, entrepreneurs don't lose hope

PanARMENIAN.Net - Optimism amongst privately held businesses (PHBs) 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 PHBs across 36 economies, also shows an overwhelming consensus that falling consumer demand is the biggest threat to PHB 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, PHBs 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 polarized results suggest there are still pockets of hope in the global marketplace and it is no coincidence that PHBs are some of the first to realize," explained Alex MacBeath, global leader of privately held business services, "Their macro view of the world economic stage explains the overall slump in optimism but while PHBs are preparing for a prolonged and painful downturn, those in the emerging economies realize that at their own micro level it could offer real opportunities."



Despite the pessimism, the survey found PHBs from 11 countries remained optimistic about the outlook for their economies, with India (+83%), Botswana (+81%) and Brazil (+50%) heading the list, with Armenia having the score of +46. 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 centers but also of its close trading links with both the East and the West.



When asked to identify the single factor causing most concern for their business, PHBs in 33 out of the 36 economies cited a fall in consumer demand with a shortage of business credit a secondary concern. Alex MacBeath added, "The economies in our survey contribute 81% of global GDP. If politicians were in any doubt about the need to take steps to boost consumer spending and kick start the global economy this overwhelming consensus from PHBs should surely persuade them."



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 PHBs 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.