According to a report published by the Markit Global Business Outlook Survey, India continues to top the list when it comes to being optimistic about business activity. The report revealed that India’s optimism shone through even as other countries like China, Japan and the Euro Zone were either reeling in or recovering from recession.
India’s net balance read +35% in October this year and is significantly higher than the combined average of the BRIC comprising of Brazil, Russia, India and China, with the figure standing at +27%. India also stands higher than the worldwide trend, which was recorded as +28% in the survey.
The profit outlook for the next one year also projects India’s balance reading to be about +34%, higher than the global reading of +20% and the BRIC reading of +19%.
The Markit Global Business Outlook Survey also highlighted some of the major concerns that companies worldwide have about the outlook for the next 12 months. The fear of a downturn in the Euro zone, a worsened global economic climate, higher interest rates in the US and Britain, increase in geopolitical risks from problems in West Asia and Ukraine, and increasing political uncertainty in the UK, US, Japan and other countries.
The survey indicated that among all the countries that were surveyed, those in Britain were the most optimistic about the next 12 months. This was recorded even as expectations about activity levels dropped to an all-time low in the services and manufacturing sector since June 2013. The business expectations were considerably low among the other major emerging markets as indicated by the study.
As such, one of the main reasons for the reduced economic growth in the last few years was the unsatisfactory performances of the major EM (emerging market) economies. Reports suggest that this trend would only intensify with time over the next few months. Tensions are rife across the BRIC as business optimism sunk to the lowest recorded level since the global financial crisis.
While an increase in business expectations provides some hopes for companies in China, Russia continues to remain a major concern with its currency spiraling downwards, as well as with general uncertainty. These factors have contributed to the country’s business expectations dropping significantly low over the past year.
Even Japan feels the brunt of reduced business optimism as more and more companies in the country move away from ‘Abenomics’ to foster growth. However, the more recent deflation beating policies churned out by Japan could possibly see a revival of business expectations as prices are driven up next year.
Summary
Despite many countries around the world facing recession and dipping business optimism levels, India continues to top the global optimism list with its increasing business expectations. The nation continues to stand ahead of other countries with a net balance of +35% which is greater than the global net balance of +28%.
