Business optimism declines globally | VietNam Today

HCM CITY ? Optimism in the economy suffered a second successive fall in the third quarter in Viet Nam, a global survey by auditing and consulting firm Grant Thornton has found.

The International Business Report poll of more than 2,700 businesses in 39 economies in August-September found that only 38 per cent of Vietnamese respondents were optimistic about the economic outlook for the next 12 months, compared with 54 per cent last quarter.

"In Q1/2011, the Government took some strong decisions in the management controls of monetary and financial policy, especially to reduce interest rates and increase credit growth," Ken Atkinson, managing partner of Grant Thornton Viet Nam, said.

"Whilst these are beginning to have an effect, it is the first time in my 20 plus years here that I have seen so many Vietnamese business owners pessimistic about the future."

The country experienced a welcome slowdown in inflation in Q3 (July ? 1.17 per cent, August ? 0.93 per cent, and September ? 0.82 per cent), which suggests the worst may be over.

"Whilst there has been a certain amount of de-stocking, businesses generally are suffering from the burden of high borrowing costs (72 per cent) and shortage of working capital (50 per cent)," he added.

Wage increases seem set to continue to add to the inflationary pressure with 70 per cent of respondents indicating salary and wage increases over the next 12 months would be in line with or above inflation.

The report lays bare the dramatic impact of economic uncertainty and financial instability on the global business community.

It reveals that net global business optimism has collapsed from 31 per cent to just 3 per cent.

Ominously, this uncertainty has also spread to key emerging markets, with both China and India seeing net optimism decline by 29 per cent.

The optimism of business owners in mature markets has been hit particularly hard; in North America, optimism has dropped from 43 per cent to 3 per cent, and in the EU, from 34 per cent to zero.

Ed Nusbaum, CEO of Grant Thornton International, said: "These figures are the worst since 2009, when we were in the midst of the global recession. The worrying thing is that negative sentiment about the wider economy is now damaging business growth prospects.

"Businesses, particularly in developed countries, are telling us they feel they have no control over how things are going to turn out. There's a perception that attempts to create stability and stimulate growth just have not worked. An economic outlook that appeared to be improving just three months ago has been replaced with one of total uncertainty."

The prospect of businesses driving growth is being constrained by the on-going uncertainty, especially in many mature markets where governments and consumers are reining in spending.

Globally, business expectations for employment, revenue, and profits have fallen by 11, 10, and 9 percentage points respectively.

In Viet Nam the corresponding figures are 10 per cent for employment and 6 for revenue but 14 per cent of respondents expect a decrease in profits. ? VNS

Source: http://www.dztimes.net/post/business/business-optimism-declines-globally.aspx

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