International Business report

Business optimism has recovered globally

Milano, 16 January 2020 – New figures from Grant Thornton’s International Business Report, a survey conducted among nearly 5,000 mid-market companies globally, reveal that business optimism is growing (up from 56% to 59%) as concerns the economic outlook for the next 12 months, with a 5% increase in revenues in the previous 12 months reported by over half of businesses surveyed, despite the uncertain economic environment.

Revenues and profitability expectations have also improved compared to H1 2019, though slightly: revenue expectations increased from 53% to 54%, whereas global profitability expectations from 51% to 54%. Positive trends were recorded also for expectations of investments in tangible and intangible assets, with values equal or higher than those recorded in the first semester of 2019, even if worries for the shortage of finance remain.

Economic uncertainty – despite slight improvements in the first half of the year – started rising again and reached the highest level at 49%, i.e. a business out of two considers it as a challenge to its growth and one in five as a very serious issue. Despite these data, the percentage of businesses expecting to offer a salary increase in the next 12 months reached 80%, the highest value ever recorded.

Contrary to the global situation, business optimism in Europe has decreased compared to the first half of 2019, down from 51% to 45%. The main reasons can be identified in the shortage of orders (38%, up 6pp compared to 2018) and economic uncertainty (45%), which reached the highest level since 2013.

Export expectation of European business have instead increased (+5% compared to H1 2019), with all countries in the region recording the highest values.

Figures on optimism in Italy are particularly negative: confidence in the market growth for the next 12 months has decreased from 37% to 33%, a considerably lower percentage compared to the global and European ones. On the other hand, positive figures have been registered on export, as 38% of businesses is willing to invest in it in the next year. Good results also on personnel, since 36% of businesses expects to find skilled workers in the next year.

As the rest of the world, Italy perceives the risks of economic uncertainty (from 39% to 41%), though the percentage is lower than the global risk perception.

“Basing on the results of the latest Grant Thornton IBR – commented Alessandro Dragonetti, Grant Thornton Head of Tax – in the semester 2, 2019, optimism has grown again (59%), even if this percentage is below the 2018 average (71%). This wave of positivity could, in the long term, bring benefits also in Europe and in Italy, where optimism on economy has decreased compared to the levels of semester 1.

Despite a geo-economic that is constantly strained by political instability, the positivity on exports registered in Italy represents a very relevant result. Therefore, investing in the right drivers is crucial to support business growth, including R&D activities, which focus primarily on innovation and sustainability. Basing on some of the Grant Thornton IBR results, in fact, 71.9% of businesses that aim to increase exports are also increasing investment both in R&D and in IT, compared to an average of 45.2%.

The concept of business itself is going through a radical transformation and this is the time – concluded Alessandro Dragonetti – to invest in human capital, awarding the openness to change and accepting the challenges deriving from the dynamic context in which we operate”.