Business Optimism in Mature Markets Rise, Emerging Economies Less Confident

English: US President Barack Obama and British...

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Global business optimism, particularly in mature economies, rose five percentage points in third quarter 2013 to a net balance of 32 percent according to the latest data from the Grant Thornton International Business Report (IBR), a survey of 3,300 business leaders in 45 countries.

In the United States, business leaders continue to show optimism about the performance of the nation’s economy. In third quarter 2013, optimism among U.S. business leaders remained positive at a net balance of 52 percent, just marginally down from 55 percent in second quarter 2013. This sentiment is echoed throughout other developed markets, especially in Europe. The proportion of businesses optimistic about the next 12 months across the European Union rose to 22 percent in third quarter 2013, up from just 2 percent from the previous quarter — the highest level recorded since second quarter 2011. The improvement is led by a dramatic increase in optimism in the United Kingdom, which climbed to a record high net 76 percent, and Germany optimism rose to a net balance of 51 percent up from 45 percent the previous quarter.

“While these results are certainly encouraging, the recent deferral yet again of budget and debt ceiling negotiations in the United States threatens to derail this global economic progress,” said Stephen Chipman, chief executive officer of Grant Thornton LLP. “Our country’s political leaders need to seize the opportunity to finally develop an enduring fiscal plan that provides a long-term, stable economic environment to unlock the enormous potential for U.S. business growth.”

Businesses in emerging economies are markedly less confident. Brazilian optimism fell to net 31 percent from the previous quarter’s net 43 percent, a record low. Across Latin America, optimism fell ten percentage points to net 38 percent — its lowest since 2009. Elsewhere, Indian optimism (net 57 percent) fell to its lowest since 2003; Russia slid to net 19 percent from net 28 percent; Turkey (net 6 percent) dropped to its lowest since the financial crisis; and South Africa hit an all-time low of net 18 percent.

While revenue growth expectations in the United States slipped slightly in Q3, profitability expectations climbed again. Net 50 percent of businesses expect revenue to grow during the next 12 months, down from 59 percent in second quarter 2013. A net balance of 54 percent of business leaders expect profits to grow, up from 48 percent from the previous three months. Hiring expectations in the United States remain above the global average with a net balance of 42 percent of business leaders foreseeing an increase in hiring during the coming year. This reflects the fourth successive quarterly rise in this indicator.

From: Grant Thornton LLP

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