Global business confidence is balancing on a knife edge heading into 2012. With the global economic outlook dominated by the crisis in the Eurozone, fears are increasing that business growth will become even more difficult than in 2011.
Grant Thornton’s International Business Report (IBR) shows that the global business optimism balance percentage for 2012 stands at a net 0 per cent i.e., those business leaders feeling optimistic (36 per cent) about their economies in 2012 less those feeling pessimistic (36 per cent).
Critically, the key drivers for Irish businesses appear to have stabilised as:
- 72% expect revenue to increase or remain the same;
- 78% expect selling prices to increase or remain the same;
- 79% expect profitability to increase or remain the same; and
- 65% expect investment in research and development to increase or remain the same.
However, significant challenges remain ahead. Employment expectations continue to be weak at -17 per cent (2011 -15 per cent). IBR 2012 shows that Irish export expectations have fallen from +31 per cent in 2011 to +25 per cent in 2012.
It is becoming increasingly clear that the global economy is at a point of inflection. It is not yet evident whether the future will be more or less stable than the sustained period of growth and stability that has existed since the 1980s or arguably since the end of World War II. It is clear however that the main issues shaping the global economy are not incremental but fundamental.
IBR 2012 has identified greater optimism and spirit in Irish business with turnover, selling prices and profits expected to continue to stabilise in 2012. Businesses which adapt their business model for the enduring impact of Europe, BRIC nations, regulation, credit and technology will be the most successful in the next decade.
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