- India Inc. most optimistic about rise in exports; cautious business optimism as economic uncertainty spikes
According to the latest results of Grant Thornton’s International Business Report (IBR), India has emerged as the most optimistic nation for export expectations despite the increasing economic uncertainty all around. This is a significant jump from Q4 2017 where the country ranked 18th on this parameter and only 18% respondents vouched for an increase in exports as compared to 54% in H2 2018.
While India’s rank on the business optimism index improved from 6th in Q2 2018 to 4th in H2 2018, the percentage of respondents declined from 78% to 67%, finds the research, which gathers responses biannually from 5,000 business leaders in 35 economies including the G20 and has a sample size of more than 250 respondents in India. This improvement in India’s business optimism ranking could be the result of the rising global economic uncertainty, but India also displayed this global trend, ranking 3rd in citing economic uncertainty as a constraint for growth.
Vishesh C Chandiok, CEO, Grant Thornton India LLP, said:
“The next six months are full of uncertainties – and probabilities of those uncertainties have only increased in the last quarter – a ‘no-deal Brexit’, a ‘hung verdict’ in the Indian elections and the impact of the global trade wars. It should be worrying for our policymakers that mid-sized Indian businesses remain at the top of the global league tables on all the concerns that will hinder investment, and hence job creation.”
Globally, revenue expectations have declined sharply and Indian businesses are displaying a similar sentiment. There is a marginal increase in revenue and employment expectations from Q2 2018 and India continues to acquire the 4th position on these parameters. India Inc. seems to be relatively more optimistic about the future when it comes to selling prices and profitability expectations. India stands at the 6th position in H2 2018 as against 9th in Q2 2018 and 3rd position as against 9th position in Q2 2018 in selling prices and profitability expectations, respectively.
India has taken a major jump on investment parameters, improving its rank from 18th in Q2 2018 to 5th in H2 2018 on investment in new buildings. Investments in plant and machinery and R&D also tell a similar tale as India takes the 4th position in H2 2018 as against 16th position and 13th position respectively in Q2 2018.
Indian businesses have been highlighting shortage of finance as a major hindrance in the path of growth since Q4 2017. In H2 2018 as well, India ranks first on this parameter. With the low employment expectations, Indian businesses are also wary about the availability of skilled workforce. India tops the chart in highlighting lack of skilled workforce as an impediment to growth. Lack of talent has resulted in a fall in demand and that has also emerged as one of the top concerns for India Inc. Despite India’s jump in the World Bank’s Ease of Doing Business ranking, Indian businesses continue to cite regulations and red tape as one of the key hurdles for business growth and India ranks 2nd on this parameter.
Commenting on the global outlook, Francesca Lagerberg, Global Leader, Grant Thornton International, said:
“While global financial markets are increasingly volatile, business leaders in the real economy remain optimistic because global GDP is forecast to continue growing and they know their business will grow with it. Despite increasing downside risk, economic fundamentals remain strong and opportunities exist.”
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