I was interviewed last week by CNBC and BBC World News to discuss our Q3 International Business Report (IBR) results. The big surprise was that business optimism in the UK more than doubled over the past quarter. Yes, we all know that the UK economy has been improving over the last six months, but to see optimism surge like this in the UK – with predictions of higher company profits and significantly increased hiring – was a pleasant change from past results in the country in which I currently live.
While the US was relatively flat over the past quarter, it remains substantially ahead of last year, indicating that business leaders remain optimistic about their revenue and profitability prospects, despite some of the craziness in Washington. I expect the US recovery to continue, and not be interrupted – at least for now – by the divisive nature of the country’s politics.
In China, business leaders also showed improving optimism over the last quarter. It looks like they have become comfortable with growth of only 7.5% in the economy, and have adjusted their businesses to generate increased sales and profits as the economy rebalances. Things have even picked up for business leaders in the eurozone, who have shown little confidence over the past year.
Our clients in all these regions can take advantage of the improved conditions. But the models have shifted. I believe business has become more globally integrated, but companies must be agile and creative in identifying the best way to capitalize on these opportunities.
On the other hand, optimism decreased in the other BRICS economies, with record lows in Brazil and South Africa. Latin America as a whole dropped significantly, and other emerging markets that had previously shown improvements, such as Turkey, dropped precipitously. Recent labour and political unrest in these economies may well have contributed to the falling optimism of the business leaders we surveyed.
Interestingly, Grant Thornton firms in these countries remain very strong; we have seen amazing expansion in Brazil, India, and South Africa this year and continue to see opportunities across the globe. Developed markets may be staging something of a fight back – which bodes well for the strength of the recovery – but emerging markets remain central to our growth plans and those of our most dynamic clients.
Ed Nusbaum is global CEO at Grant Thornton.
