Business owners optimistic about 2011

2011-01-19 12:02

SA business owners are more optimistic about 2011 than they were about last year, a survey released today shows.

“While the strong rand will no doubt make business conditions tough for some this year – particularly those with an export focus – it seems South African business owners continue to be optimistic about the nation’s economic landscape for the year ahead,” said Leonard Brehm, national chairperson of Grant Thornton South Africa.

Grant Thornton’s 2011 International Business Report’s (IBR) optimism/pessimism index shows an optimism balance by South African business owners of +64%, up 4% on last year’s index.

This compared to a global optimism balance of +23% for 2011, and +24% for 2010.

An “optimism balance” is the proportion of business owners in South Africa reporting they are optimistic, less those reporting they are pessimistic.

Optimism could have slumped following last year’s World Cup, but it had done the opposite.

However, respondents were less optimistic about investment in buildings, at +17% for 2011, compared to +25% last year.

“The construction sector also experienced significant retrenchments over the past two years,” said Brehm.

“The decline for investment in buildings could indicate tough times ahead for the construction industry.

“No doubt the World Cup infrastructure and construction boom experienced during 2009 and 2010 may also have something to do with the pessimistic outlook in terms of construction projects for 2011.”

The survey found Western Cape business owners were the most optimistic with a +72% balance, while Eastern Cape recorded the lowest optimism balance of +52%. KwaZulu-Natal was +69% and Gauteng +62%.

When it came to employment, levels of optimism differed significantly across the regions.

The overall level for South Africa was +30%.

The Western Cape was very optimistic at +42%, while the Eastern Cape was far less optimistic about employment prospects in 2011, recording just +16%.

Gauteng scored +33% and KwaZulu-Natal +26%.

Worldwide, confidence levels in economic performance were highest in Latin America.

“This is the first year Latin America has led the world on optimism with a balance of +75% of privately held business owners expressing optimism about their region’s economic performance in 2011.”

Optimism in the Asia Pacific region, excluding Japan, was +50%.

North America was +26%. Europe was the least optimistic region at +22%.

“The Latin American region has been booming for a number of years, particularly in Brazil, and this has been recognised by them being awarded the right to host the 2014 World Cup and the 2016 Olympics,” said Brehm.

“South Africa’s aspirations for inclusion in the Bric economies is ambitious when one measures the SA economy in relation to those in the Bric (Brazil, Russia, India and China) countries.

“Only through a rapid acceleration in the nation’s economic growth strategy, could we consider this opportunity seriously,” he said in reference to Bric, considered the world’s leading newly-advanced economies.

South Africa received an invitation from China to join this group, even though its growth rate was far below that of the Bric countries.

The survey, undertaken quarterly, looks at 11 000 businesses a year across 39 economies.

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