Raymond Chabot Grant Thornton is releasing the results of a survey on optimism among business executives. The findings gleaned from the Grant Thornton International Business Report (IBR) indicate that Canada is doing well economically on the international stage. Canadian business executives are optimistic about hiring, GDP growth, and business profitability forecasts, as well as revenue and investment outlooks in infrastructures and machinery.
If Canada is 6th in the world behind the Philippines, Georgia, the United Arab Emirates, Mexico and Chile, it leads all Western nations, and is far head of the pack of European countries and the United States. This enviable position is primarily due to the robustness of the Canadian financial system and the strength of Loonie, which is spurring infrastructures and machinery investments.
That said, the global trend is quite downbeat, as the optimism level of business executives plummeted during the last quarter from 31% to a low of only 3%. This trend stands in very sharp contrast to the optimistic sentiment of Canadian business executives, which is still at 60%. Ominously, this uncertainty has also spread to key emerging markets, with both China and India seeing net optimism decline by 29 percentage points. The optimism of business owners in western markets has taken a hit as well: optimism nosedived from 42% to -2% in the U.S. and from 34% to 0% in the EU.
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 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 haven’t worked. An economic outlook that appeared to be improving just three months ago has been replaced with one of total uncertainty. Moreover, rising shortages of demand were reported not just in Europe and North America but also in the BRIC, South East Asian and Asia-Pacific economies. Incidentally, two years ago the same survey indicated that the emerging markets would underpin the global recovery. But now they are also suffering a crisis of confidence.
This finding seems to refer in particular to the current economic uncertainty and financial instability prevailing internationally, and especially in Europe. Agreeing on a package of measures to restore both investor stability and confidence is arguably the single biggest challenge facing policymakers.
Click the following link to view the Grant Thornton International Business Report (IBR): http://www.grantthorntonibos.com/index.asp.