A
pandemic collapse in business optimism during the third quarter of 2011 lays
bare the dramatic impact of economic uncertainty and financial instability on
the global business community, including Vietnam, finds a newly-released research
fromGrant Thornton’s International Business Report (IBR).
The latest research reveals that net global
business optimism has collapsed from 31 per cent to just 3 per cent.
Ominously, this uncertainty has also spread to
key emerging markets with both China and India seeing net optimism decline by
29 percentage points. The optimism of business owners in mature markets has
been hit particularly hard; in North America optimism has dropped from 43 per
cent to 3 per cent, and in the EU from 34 per cent to 0 per cent.
Ed Nusbaum, CEO of Grant Thornton
International, said: “These figures are the worst since 2009, when we were in
the midst of the global recession. The worrying thing is that negative
sentiment about the wider economy is now damaging business growth prospects.
“Businesses, particularly in developed
countries, are telling us they feel they have no control over how things are
going to turn out. There’s a perception that attempts to create stability and
stimulate growth just haven’t worked. An economic outlook that appeared to be
improving just three months ago has been replaced with one of total
uncertainty.”
Vietnam’s optimism for its economic outlook
has, in line with other counties, suffered a second successive fall in the third
quarter of 2011 compared to the previous quarter it moved from +54 per cent to
+38 per cent.
In the first quarter of 2011, the Vietnamese
government took some strong decisions in the management controls of monetary
and financial policy, especially to reduce interest rates and increase credit
growth. “Whilst these are beginning to have an effect, it is the first time in
my 20+ years here that I have seen so many Vietnamese business owners
pessimistic about the future,” said Ken Atkinson, managing partner of Grant
Thornton Vietnam.
Vietnam experienced a welcome slowdown of the
growth rate of CPI in the third quarter of 2011 (July – 1.17 per cent, August –
0.93 per cent, September – 0.82 per cent) thereby suggesting that the worst may
be over.
“Whilst there has been a certain amount of
de-stocking, businesses generally, in Vietnam, are suffering from the burden of
high borrowing costs (72 per cent) and shortage of working capital (50 per
cent),” added Atkinson.
Wage increases seem set to continue to add to
the inflationary pressure, in Vietnam, with 70 per cent of respondents
indicating salary and wage increases over the next 12 months would be in line
with or above the rate of inflation.
The prospect of businesses driving growth is
being constrained by the on-going uncertainty, especially in many mature
markets where governments and consumers are reigning in spending. Globally,
business expectations for employment, revenue and profits have fallen by 11, 10
and 9 percentage points respectively. In Vietnam the corresponding figures are
10 per cent for employment, 6 per cent for revenue but 14 per cent of
respondents expect a decrease in profits.
A shortage of demand is now the single biggest
constraint on growth facing businesses around the world not just in the EU (29
per cent) and BRIC countries (32 per cent) but also in ASEAN (41 per cent), G7
(32 per cent), PIGS (42 per cent) and Asia Pacific economies (48 per cent),
including Vietnam (48 per cent), Thailand (88 per cent), Taiwan (40 per cent),
Singapore (14 per cent), Japan (71 per cent) and China (38 per cent).
“Currently, the problems Vietnam needs to
continue to address are inflation and interest rates. The stock market is still
gloomy, partly reflecting the views of many people and businesses, showing the
loss of faith in economic growth this year and even into 2012,” Atkinson said.
Bill Hutchison, advisory services partner
added, “Europe, one of the major markets for emerging economies, including
Vietnam, faces a double set of problems arising from a slowdown in economic
activity and several countries facing crisis in terms of their national debt.
There is now a major risk of a double dip recession in many European countries.
This could have a significant negative impact on Vietnam, especially at a time
of reduced domestic confidence and retail spending.”
vir.com.vn
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