India Inc is the most optimistic around the world when it comes to their business outlook, unaffected by global credit crunch and boosted by expectations of over 8% growth of the domestic economy, says a new report.
Economic activity in 2008 is expected to proceed at a vigorous pace in the developing Asian countries, global consultancy firm Grant Thornton's international business report (IBR) said.
While China is likely to witness another year of double-digit growth, India is expected to grow at over 8%, it stated. "Indian businesses are buoyed by the ongoing success of their economy and their increasing integration into the world markets," Grant Thornton India National Markets Leader Monish Chatrath said.
Although, the optimism level in India is well above the global average, Indian businessmen are less positive than last year (dropping to +95% from +97 last year), said the report, which tracks the attitudes and expectations of small and medium-sized businesses. India's optimism relating to exports in 2008 has increased by 16%. In contrast the global optimism on exports has risen marginally by two per cent.
Indian businesses are also relatively more upbeat about investments, with 61% of the respondents feeling they would make new investments during the ensuing year. Businesses across the world have shown resilience in the face of global financial turmoil. The annual report shows that despite the global financial crisis, 42% of businesses across the globe are still optimistic about the economic outlook. This is only three percentage points lower than in 2007.
The survey result reflects the confidence that the global economy will remain buoyant. However, "it is the robust pace that was seen over the past five years, which appears to have ended and we have entered a period of greater uncertainty," Chatrath added.
India's position as having the most optimistic industry has been challenged by Philippines for the first time in five years. India now shares the top spot on the optimism league table with Philippines, where a similar proportion of the respondents are as hopeful.
The optimism can be attributed to the robust economic growth in recent years and widespread expectations that this momentum would be sustained during 2008, the report said.
The major threats that would loom over businesses and the global economy over the next 12 months include the end of fixed rate mortgage deals for millions of homeowners, marked slowdown in the global housing market, reduction in consumer spending, Grant Thornton added.
The respondents were positive about the future of the specific business aspects relating to the topline. Across the world, about 64% of businesses globally expect turnover to increase and about 34% hope to raise their selling prices over the next year.
Japanese business leaders are the least optimistic. In a reversal of the trend seen since 2003, pessimism levels in this year's survey slumped further to -44% from -5%.
Vietnam, Singapore, Hong Kong and Poland follow India and Philippines in the list of top five optimistic countries. Mainland China and Australia were on the sixth position.