Global business confidence on a knife edge heading into 2012

Canadian business optimism falls in fourth quarter, but Canada remains among the most optimistic countries in the world

TORONTO, Jan. 27, 2012 /CNW/ - Global business confidence is balancing on a knife edge heading into 2012 according to new figures from Grant Thornton International. The fourth quarter results of the International Business Report (IBR) shows the global economic outlook is still dominated by the crisis in the eurozone, and fears are increasing that business growth will become even more difficult than in 2011.

The latest research shows that global business optimism in the fourth quarter of 2011 stands at net 0%, indicating a balance between those business leaders feeling optimistic about their economies in 2012 and those feeling pessimistic. It represents a further deterioration from 3% in Q3 2011 and 31% in Q2 2011.

Canada, which stood out in the third quarter by posting net business optimism of 60%, saw this fall to 46% in the fourth quarter. Though not immune from the global slowdown, Canada is still significantly above the global average, and alongside Germany, is the most optimistic mature economy. Canada is also one of the few major economies that plans to raise wages above inflation, ranked third behind India and Australia.

Optimism levels in the BRIC economies (up from 25% to 34%) and the United States (up from -1% to 2%) have shown improvement over the last quarter. However, at the global level, this has been offset by a large drop in Europe where optimism fell from 0% to -17% in Q4. Within the Eurozone, optimism plummeted from 2% to -16%.

Ed Nusbaum, CEO of Grant Thornton International , said: "Heading into 2012, we're seeing a polarization of business confidence between Europe and the rest of the world. However, the threat of total meltdown in the eurozone means business leaders remain uncertain about the year ahead—they simply do not know how things will turn out. That uncertainty is sapping confidence and choking business growth prospects."

The research also suggests that global trade is suffering. Having risen by ten percentage points in Q3, the proportion of businesses citing a shortage of orders rose again in Q4, up five percentage points to 37% globally. This result was largely driven by an increase of nine percentage points across the Eurozone, but businesses in North America (up seven) and the BRICs (up four) are also suffering.

Just 13% of businesses in Canada cite a shortage of orders/reduced demand as a constraint on growth in 2012, as compared with 31% in the US and 37% globally. However, a lack of skilled workers is a hot topic in Canada—42% cite this as a growth constraint in 2012, much higher than in the US (18%) or globally (28%).

In addition, business expectation for increasing revenues and profits fell by two percentage points globally over the last quarter. In Canada, profitability expectations for 2012 are down, dropping from 52% in Q3 to 29% this quarter; revenue expectations dropped from 50% to 36%. Profitability expectations are also down significantly in the EU (down 12 percentage points to 13%), but also in Latin America (down 16 to 47%) and in the ASEAN region (down 24 to 33%).

Away from the economic gloom, the results from the United States provide a welcome and encouraging bright spot in the research. Expectations for increasing revenue and profits in the world's largest economy in 2012 are both up by seven percentage points, to stand at 48% and 40% respectively. Further, net 35% of US businesses plan to hire workers over the next 12 months, up from just 17% in Q3.

"Canadian business confidence is one of the highest among major economies around the world. Although it has dipped this past quarter, it is still well ahead of the US, even with their modest rise in confidence in the same time period," says Bill Brushett, National Clients and Services Partner, Grant Thornton LLP in Canada. "We believe the time is right for Canadian businesses to take full advantage of this optimism and the opportunities that exist in many developing economies. Hopefully, Canadian businesses will see the term 'global expansion' in a whole new light—one that shines beyond our neighbour to the south."

In addition to releasing figures for the fourth quarter, Grant Thornton International has also published a summary of global research conducted in 2011. To read the full report, visit

Bill Brushett, National Clients and Services Partner in Canada, is available for interviews. To view a video of Bill discussing recent IBR results and what they mean for Canada, visit:

Notes to editors

The Grant Thornton International Business Report (IBR) provides insight into the views and expectations of over 11,500 businesses per year across 40 economies. This unique survey draws upon 20 years of trend data for most European participants and nine years for many non-European economies. For more information, please visit:

Data collection

The research is carried out primarily by telephone interview lasting approximately 15 minutes with the exception of Japan (postal), Philippines and Armenia (face to face), mainland China and India (mixture of face-to-face and telephone) where cultural differences dictate a tailored approach. Telephone interviews enable Grant Thornton International to conduct the exact number of recommended interviews and to be certain that the most appropriate individuals are interviewed in an organisation which meets the profile criteria.

Data collection is managed by Grant Thornton International's core research partner - Experian. Questionnaires are translated into local languages with each participating country having the option to ask a small number of country specific questions in addition to the core questionnaire. From 2011, fieldwork takes place on a quarterly basis every quarter with fieldwork lasting approximately one month and a half.


IBR is a survey of both listed and privately held businesses. The data for this release are drawn from interviews with 2,800 businesses across the globe conducted in November/December 2011.

The target respondents are chief executive officers, managing directors, chairmen or other senior executives (title dependent on what is most appropriate for the individual country) from 40 economies primarily across five sectors: manufacturing (25 per cent), services (25 per cent), retail (15 per cent) and construction (10 per cent) with the remaining 25 per cent spread across all sectors.

Locally, the sample tends to cover the sectors mentioned previously, with some countries being able to have local valid data for specific sectors or regions when the sample size is large enough.

Any and all references to Grant Thornton International are to Grant Thornton International Ltd.

Grant Thornton International is one of the world's leading organisations of independently owned and managed accounting and consulting firms. These firms provide assurance, tax and specialist business advice to privately held businesses and public interest entities. Services are delivered independently by the member and correspondent firms within Grant Thornton International, a non-practicing, international umbrella entity organised as a private company limited by guarantee incorporated in England and Wales. Grant Thornton International does not deliver services in its own name or otherwise. Grant Thornton International and the member firms are not a worldwide partnership.

Image with caption: "IBR optimism survey country ranking. (CNW Group/Grant Thornton LLP)". Image available at:

SOURCE Grant Thornton LLP

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Tania Freedman

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