Continued business confidence in Singapore, regional economies strong, UK and US businesses cautious
Continued business confidence in Singapore, regional economies strong, UK and US businesses cautious
The first results from the 2006 Grant Thornton International Business Owners Survey (IBOS) conducted in 30 countries around the world and published today (5 January 2006), show a marked shift in the mood of medium-sized businesses around the globe and a shift in optimism about the economy away from the robust performers of recent years such as the US and the UK. In Singapore, business owners here continued to show a high level of optimism about the economy over the next 12 months.
For 2006, Singapore business owners remained confident about the country’s economy with an optimism / pessimism balance (*see note below) of +64, compared to a balance of +62 in the previous year. This is up from a –30 balance in 2004, and puts Singapore among the Top 10 most optimistic countries globally. Among the East Asian countries that participated in the survey, Singapore ranked third behind Mainland China and the Philippines respectively.
Singapore business owners’ outlook toward turnover, profitability, employment, and selling prices for the coming year also reflect an overall greater confidence. For turnover, business owners here registered a +49 balance this year compared to a balance of +38 for last year. Positive sentiments regarding profitability increased from a balance of +30 in 2005 to +42 this year. The expected trend in employment also increased to a balance of +16 from a balance of +10 previously. Lastly, confidence in selling prices over the next year increased from a –4 balance last year to +9 this year.
In this year’s survey, the economic powerhouses of the '60s-'80s, Japan and Germany, show dramatic improvements in confidence. Germany’s balance this year is +41, up from +17, -6 and -37 in previous years; and Japan, although still negative at -14, may be on the cusp of a serious revival in confidence having improved from balances of -27, -46 and -71 over the last three years. The confidence of business owners in the US regarding the economy has dropped by nearly half from an optimism / pessimism balance of +62 to +32 in one year; and in the UK the fall has been dramatic - from +46 to just +8.
The most optimistic business owners of all, for the third year, are in India with an optimism/pessimism balance of +93 (+88, +83 and +25 in the previous three surveys); and in China, where business owners took part in the survey for the first time, the confidence score was a balance of +77.
Overall, the survey shows that businesses in 26 out of 30 countries are optimistic about their economy's performance. And in 13 countries optimism has actually improved over the last year. However, in a range of major G8 economies including the US, Canada, UK, France and Italy, the mood is now certainly less confident. Four of the biggest drops in confidence in the whole survey are in G8 countries.
Said Foo Kon Tan Grant Thornton’s Managing Partner, Mr Kon Yin Tong, "This has been a year of uncertainty in some of the world’s largest economies, although hard economic growth indicators continue to be positive. Some former powerhouses of the '60s '70s and '80s, such as Japan and Germany appear to be significantly more confident about their prospects. And the big winners of recent years – the major new economic powers of the emerging world, China and India, continue to soar in economic confidence. Singapore’s economy has shown strong resilience in 2005, successfully weathering obstacles like sky-high oil prices and rising interest rates, to perform better than expected overall. This positive outcome has translated into a sustained confidence on the part of Singapore business owners for the coming year ahead.
However, globally there is an overall increased mood of pessimism that is hitting confidence. Whether it is the ongoing legacy of the Iraq conflict in the US and UK; hurricanes in the US; racial tensions and unrest in France, social and political events certainly appear to have impacted the mood of the business world overall."
Other very high confidence scores came from Ireland (up to +84 from +79) and South Africa (a score of +80, down slightly from +84 in the previous year).
Vishesh Chandiok, International Practice Partner, Grant Thornton, India comments: "India's business owners continue to thrive and remain very optimistic. There are no signs of a slowdown in the economy. The growing reliance on the private sector and trade liberalisation – here just like in China – is proving fruitful for medium-sized enterprises who are taking full advantage and thriving as a result."
