Global survey says business owners in India most optimistic

First results from the 2005 Grant Thornton International Business Owners Survey (IBOS) conducted in 24 countries around the world show that business owners in India are the most optimistic of all.

According to the survey results "" which are yet to be made public "" the most optimistic business owners of all, for the second year, are in India with an optimism-pessimism balance of +88 per cent.

Raw material-producing economies such as Australia, Canada and South Africa also remain very optimistic.

The greatest surge of optimism compared with last year is in Ireland (up by 72 points to +79 per cent), Poland (up by 53 points to +21 pr cent) and two post-SARS Asian economies, Singapore (up by 92 points to +62 per cent) and the Philippines (up by 51 points to +50 per cent).

Vishesh Chandiok, international practice partner, Grant Thornton, India commented, "The pace of fiscal, economic and industrial reforms has not only continued under the new government but appears to have gathered speed. India Inc is emerging bigger, faster and stronger. India is also fast becoming the world's knowledge centre and back office. With an economist at the helm of the Government, far- reaching economic reforms and enterprise of Indian entrepreneurs, I believe India will continue to outshine others for some time to come."

Business owners in Japan (-27 per cent) are the most pessimistic about their country's economy although they are much less pessimistic than last year (-46 per cent) when they were also at the foot of the league table.

Japan is now the only country with a negative balance in the survey. After Japan, the least optimistic countries are Italy (+7 per cent), Spain (+9 per cent), Taiwan (+14 per cent) and Russia (+14 per cent).

Companies in 13 out of the 24 economies surveyed are much more optimistic than last year, with an increase of more than 10 per cent in their optimism-pessimism balance. Only three countries significantly buck this trend - the US, Russia and Spain - with more than a 10 per cent drop in their optimism-pessimism balance.

Expectations for investment (in new buildings and plant and machinery), a critical indicator of medium-term strength, are at the highest level in the history of the global survey and at the highest level in the EU since 2001.

Despite the overall optimistic results, however, the impact of terrorism had affected business owners' views. Nearly a third (29 per cent) of business owners in the whole survey said that terrorism had made them more pessimistic about their economy.

This was most notable in Mexico (53 per cent), Spain (49 per cent), Taiwan (42 per cent), Poland (37 per cent), Turkey (36 per cent), Italy (35 per cent), Japan (35 per cent), Germany (34 per cent), the Netherlands (31 per cent), the US (31 per cent) and Russia (29 per cent).

Commenting on the Indian results Chandiok said, "these are clearly exciting times for India, with business sentiment at an all-time high. Inward and outward foreign investment continues to grow, and the Sensex has touched new highs indicating a return of investor confidence."

He said that the country's ability to raise capital has increased substantially both in the domestic and international capital market and this has led to renewed confidence in investing in projects. Where does the US stand in all this?

According to Chandiok "Terrorism has obviously had a strong impact on business opinion all over the world. But despite that, the business world is a much more optimistic place than a year ago. The US, the world's largest economy, may have passed the peak in its current economic cycle however, and optimism there, although high, has dropped from +78 per cent to +62 per cent. It seems to be a case of the US becoming less buoyant just as the rest of the world becomes more positive."

Monish Chatrath, Practice director - Management Assurance and Risk Services said, "Investor wealth in India is presently at a record level of approximately Rs 15 trillion ($ 250 billion), mainly due to the large amount of wealth generated in medium and small scale businesses over the recent few years. Manifest in such numbers is investor (both domestic and international) confidence and optimism about the growth potential in India. Investors and businessmen have come to realise that the economics of doing business in India will continue to be attractive, with strong fundamentals and a seemingly irreversible approach to reforms despite changes in governments."

The survey was conducted during the period September-October 2004 and in India covered 500 medium sized companies while globally 7000 companies were covered.