The crisis in the Eurozone continues to erode global business confidence, according to a Grant Thornton International survey.
TORONTO: The crisis in the Eurozone continues to erode global business confidence, according to a Grant Thornton International survey.
The global accounting and consulting firm reports fourth quarter results of its International Business Report (IBR) shows fears are increasing that business growth will become even more difficult than in 2011.
Indeed, optimism registered zero in the fourth quarter of 2011, down from 3% in the third quarter, and 31% in Q2.
Even Canada’s optimism is fading. It registered a 60% in Q3 and fell to 46% in Q4, although Grant Thornton says Canada is the most optimistic and one of the few countries – third behind India and Australia – with plans to raise wages above inflation.
Things are looking up for BRIC countries (from 25% to 34%) and the US (from -1% to 2%), but globally Europe’s optimism took a tumble from zero to -17%. In the Eurozone, confidence plummeted from 2% to -16%.
“Canadian business confidence is one of the highest among major economies around the world. Although it has dipped this past quarter, it is still well ahead of the US, even with their modest rise in confidence in the same time period,” says Bill Brushett, National Clients and Services Partner, Grant Thornton LLP in Canada.
Grant Thornton says the research also suggests that global trade is suffering. Order shortages rose 10% in Q3 and another 5% in Q4 to 37%. Much of the increase comes from the Eurozone (9%) but North America was up 7% and the BRIC nations were up 4%.
Just 13% of businesses in Canada cite a shortage of orders or reduced demand as a constraint on growth this year compared with 31% in the US.
Profit expectations are also down 2% globally. Canada is down from 52% to 29% expected profit growth, with a decline in expected revenue also slipped from 50% to 36%.
The EU is down 12 points to 13%, while Latin America slipped by 16 points to 47% and the ASEAN region by 24 to 33%.
The US, on the other hand, is expecting revenue and profits to rise. Both are up 7 points to 48% and 40% respectively, and 35% of businesses plan to hire workers over the next 12 months, up from just 17% in Q3.
“We believe the time is right for Canadian businesses to take full advantage of this optimism and the opportunities that exist in many developing economies,” says Brushett in a release. “Hopefully, Canadian businesses will see the term ‘global expansion’ in a whole new light – one that shines beyond our neighbour to the south.”
Click here for a copy of the report.