earth in hands(Charles Thompson/Barun Patro)

Despite optimism by South Africa’s privately held business sector dropping by more than half from +75% last year to just +35% for 2009, the country has risen up the ranks to become the sixth most optimistic country in the world, according to Grant Thornton’s 2009 International Business Report (IBR), released last week.

In contrast, the report paints a much bleaker picture of the global economy, with optimism among privately held businesses around the world plummeting by 56% in the past 12 months. This contributed to the Grant Thornton IBR international optimism/pessimism barometer recording a negative balance of -16% compared to +40% in 2008 – the first time in the survey’s seven-year history that pessimists have outweighed optimists about the outlook for their economy.

At the +35% optimism level, South Africa moved up from last year’s ninth position among the 36 countries surveyed in the IBR. India (83%) emerged as the world’s most optimistic country this year, followed by Botswana (81%), the Philippines (65%), Brazil (50%) and Armenia (46%).

According to Grant Thornton, in South Africa, “there was an overwhelming consensus that falling consumer demand and the shortage of business credit were the biggest threats to privately held businesses” going into this year. Gauteng (at +40%) and KwaZulu-Natal’s hubs of Durban and Pietermaritzburg (at +39%) emerged as the most optimistic regions in the country, with the Eastern Cape (at +17%) being the least optimistic. Cape Town came in at an optimism level of +33%..

Leonard Brehm National Chairman of Grant Thornton in South Africa said “Their macro-view of the global economic situation explains the overall slump in optimism. While privately held businesses worldwide are preparing for a prolonged and painful downturn real opportunities exist, especially in South Africa”, said Leonard Brehm National Chairman of Grant Thornton in South Africa

Economist Dennis Dykes said “South Africa has been relatively shielded by a healthy banking system as well as the fixed investment boom ahead of the Fifa 2010 World Cup. In addition, the 2010 event should continue to soften the effects of the global crisis, and lower interest rates and oil prices should help a modest recovery in the second half of the year,” said Dykes.

(Extract by Suren Naidoo from The Mercury)

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