Business optimism plunges in 2011

Business optimism in Vietnam fell sharply in 2011, but remained in the positive level, says a report of Grant Thornton.
According to latest figures from Grant Thornton’s International Business Report (IBR), business optimism in Vietnam dropped from 80 percent (among respondents) in the first quarter of 2011 to 34 percent in the fourth quarter. The country, however, still remains in the group of countries which have higher optimism and higher growth.

By comparison, global business optimism in the fourth quarter of 2011 stood at net 0 percent, representing a further deterioration from 3 percent in Q3 2011 and 31 percent in Q2 2011, as the global economic outlook was clouded by the crisis in the eurozone, and fears were increasing that business growth would become even more difficult than in 2011.

“2011 was the most difficult year for Vietnam since the global financial crisis. The economy is still facing many difficulties, and business optimism and confidence have dropped considerably in the last 12 months,” Ken Atkinson, Managing Partner at Grant Thornton Vietnam, said in a written statement.

“We expect 2012 to be another challenging year as the Government continues its resolve to fight inflation, and restrict credit growth. Whilst exports performed extremely well in 2011, the rate of growth in 2012 is expected to slow and this slow-down could be significant if the EU problems are not resolved.”

Globally, business expectation for increasing revenues and profits fell by 2 percentage points over the last quarter. Regionally, profitability expectations were down significantly in the EU (down 12 points to 13 percent), but also in Latin America (down 16 points to 47 percent) and in the ASEAN region (down 24 points to 33 percent).

Grant Thornton’s in-country research also suggests that Vietnam has not been affected by a slowdown in trade with only an additional 1 percent of respondents citing that a shortage of orders or reduced demand has been a constraint to growth.

The 2 factors which have been the biggest constraint on growth, in Vietnam, have been the high cost of finance and availability of working capital.

More of the respondents also felt that accessing finance would be even more difficult in 2012. However, there was a strong belief that the cost of finance would go down in 2012.

The survey was conducted by interviewing 2,800 businesses across the globe between November and December 2011.
Tuoi Tre

Tags: Vietnam business optimism

Posted by VBN on Jan 9 2012. Filed under Economy News, Enterprises. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry