The Group’s International Business Report (IBR) indicates that the possibility of investments fell by 32%, contrary to the global trend of growth of the economy.
Grant Thornton reported that the index of business optimism in Argentina fell by 32% since 2017, according to his research International Business Report (IBR). This finding is opposed to the global trend where the economic outlook is at its highest point of all time. This line coincides with Latin America in general, where optimism fell by 10% to 25% in the first quarter of 2018. Expectations of increased exports in Argentina decreased by 6% to reach 12% net, while expectations of increased employment decreased by 22% to reach 20% net, a minimum in almost two years. At the same time, the net 10% of companies expect higher profits during the next year.
Francesca Lagerberg, Head of Network Development at Grant Thornton, commented: “The global economy is firing more strongly than it has in many years. The economic predictions are positive for the short and medium term. However, history tells us that growth tends to come in cycles, with 2018 being the highest point in this case. Interest rates remain low, but are expected to rise over the next two years. This means that the window of cheap financing is closing and companies may want to borrow now if they are thinking of investing in 2019 or 2020. This moment represents a window of opportunity to invest in the future. Investing more in Research and Development (R & D) or in new technologies does not mean that workers’ wages suffer. We are experiencing a fundamental change in business on many fronts. The future of companies will require engaging with workers to take full advantage of the opportunities that arise. Companies that balance investment in infrastructure and ideas with empowering workers will have the best chance to reap the benefits in the future. And to stay resilient when economic conditions inevitably change. ”
The results reveal that the greatest increases in optimism for the next 12 months are in Europe and North America, with investment being the favorable ground for the future success of companies. The IBR finds that in the first quarter of 2018, the global optimism of companies is at 61% net, the highest figure recorded in 15 years of research. Confidence among US companies is at a record high of 89% net. In Europe, French business optimism is at a new height (75% net) and the United Kingdom is more optimistic (31% net) since it voted to leave the European Union. Trust is broad; in Greece, business optimism is in positive territory (6% net) for the first time in three years.
In Southeast Asia, optimism has increased to a net 61%. This is the highest figure in seven years. In other parts of Asia, however, China (-13pp) and Japan (-11pp) register decreases in optimism. In addition, in Latin America, optimism fell 10pp, to net 25%. However, even in these regions, levels of optimism compare favorably with those of recent years.
THE MOMENT IS NOW
The IBR reveals that despite high levels of optimism, investment in research and machinery is not increasing in the same way. Although the expectations of investment in new buildings, plants and machinery, and in R & D have increased slightly in Southern Europe (up to 5%, 3 percentage points and 1 point respectively), overall investment levels have declined. Global plans to invest more in plant and machinery have dropped 2 net points 34% in Q1, plans to increase R & D spending have dropped 3 points, and expectations of increased investment in new buildings remain constant for the third quarter consecutive.