Emerging markets drive business investment in Q2

Tuesday, July 03, 2012 | Posted by: Fiona Cullinan
Categories: Brazil, China , Russia, India, Thought leadership | Tags: business, economy, survey, IBR, International business report, optimism, Q2 2012, indicators

Grant Thornton’s quarterly global business survey is out today and shows businesses in the West sitting on trillions of dollars in liquid assets while their emerging market counterparts are investing in their long-term future. Read on for the full economic update.

In its Q2 2012 survey of 3,000 businesses from all industry sectors across the globe conducted in May/June 2012, the Grant Thornton International Business Report (IBR) shows a continued economic uncertainty with the eurozone turmoil continuing and US elections due in November. There are some bright spots, however.

Business investment is picking up globally
A regional breakdown shows this to be stronger in emerging markets, which are taking a longer-term approach to growth by increasing levels of investment.

Our IBR research (see graphic below) shows that 45% of BRIC businesses surveyed plan to increase investment in research and development (R&D) over the next year, compared with just 18% of businesses in the G7.

Similarly, 47% of BRIC businesses plan to increase investment in plant and machinery over the next 12 months, compared with 37% in the G7.

A wake-up call to the West
Ed Nusbaum, CEO of Grant Thornton International, said of the IBR findings:

“In this [uncertain] climate, businesses in mature markets are sitting on trillions of dollars, wary of spending and hiring. In the USA alone, it’s estimated that businesses are sitting on over $1.7 trillion in liquid assets on their balance sheets, $12.6 billion more than at the end of 2011. In the UK, businesses are sitting on over £130 billion.

“However, the results should act a wake-up call to businesses in developed economies, because while they are sitting on their cash, their emerging market counterparts are investing in their future. If the behaviour continues, they could find their competitiveness eroding as emerging economies put increasing resource behind research and innovation and equipment that will increase their productivity. Even in tough times, businesses need to be forward thinking, keep pace with their competitors and invest in the future of their companies.”

Further information
For more on the IBR Q2 2012 update, read our media release: Glimmer of hope for global economy as business investment picks up. Or download the infographic summary: IBR2012 – Q2 economic update – global highlights. [PDF]

For further information on the IBR, please visit Grant Thornton’s International Business Report site.

You might also find these links useful:

* Kelkoo’s BRIC comparison picks out Brazil for growth
* Meet our emerging markets experts: Simon Bevan – fresh from a nine-month sabbatical in Asia
* Businesses bullish on overseas M&A in 2012