/ 17 January 2005

SA business owners very optimistic

South African business owners are the second most optimistic among their peers internationally, the first results from the 2005 Grant Thornton International Business Owners Survey (Ibos) released on Monday reveal.

South African respondents have improved their position globally, with a score of +84% for business optimism, following India, which scored +88%. The previous two years had seen South African respondents in fourth place.

Proudly at number two, South Africa beat countries such as Ireland, Australia and Canada, which took third to fifth position. The country came way ahead of the United States, Turkey, Mexico and the United Kingdom.

Germany, Russia, France and Italy came in below 2005’s global average of +41%. Last year’s global average was +39% and only +3% in 2003.

The research was conducted among 6 300 owners of medium-sized businesses from 24 countries. Overall, the results show that owners of mid-sized companies are much more optimistic about the economy than a year ago.

There is an expectation in South Africa that profitability will rise in the upcoming year, with +61% of South African business owners expecting increased profitability, Ibos revealed. This compares with a global average of +45% and the country’s average for 2004 of +52%.

“This year’s results also show a marked improvement in South African expectations for increased selling prices. On balance, 54% (compared to 40% last year) expect to see an increase,” Ibos said.

“Encouragingly, this optimism is despite the continued strength of the rand. Notwithstanding the rand’s strength, there is still an expectation of increased exports for South Africa — +17% in comparison to +15% last year.”

The survey also found that the impact of terrorism has affected business owners’ views, as 29% of respondents said that terrorism had made them more pessimistic about their economy.

“This appears to be a lesser factor in South Africa with only 25% reporting pessimism due to security threats,” it was reported.

“These results can be attributed to a high economic growth rate, growth in the middle class, a consumer boom and political stability. All things being equal, we can look forward to consistent levels of optimism for a long time to come,” Grant Thornton South Africa national chairperson Leonard Brehm noted.

Grant Thornton India’s Vishesh Chandiok said the pace of fiscal, economic and industrial reforms appears to have gathered speed, with India “emerging bigger, faster and stronger”.

Business owners in Japan, with a -27% score, are the most pessimistic about their country’s economy, although they are much less pessimistic than in 2003 when they recorded -46%. Japan is now the only country with a negative balance in the survey.

Grant Thornton International is a global membership organisation, with each member firm independently owned and operated. Grant Thornton South Africa provides accounting services and business advice to owner-managers and entrepreneurial businesses. — I-Net Bridge