IBR - International Business Report
2nd SEMESTER 2020
Brazil moves up to 8th position among most optimistic countries
The effects of the Covid-19 pandemic have generated - and are still generating - an unprecedented global economic instability, which directly impacts the sense of optimism of business leaders. After a first semester in which only 40% of Brazilian entrepreneurs showed optimism about the future of the economy, the second semester of 2020 registered a significant improvement in this sense – more than half of the leaders (61%) are optimistic about the recovery of the business in the next 12 months.
This positioning made Brazil appear in 8th place in the global ranking present in the International Business Report (IBR), produced by Grant Thornton with the participation of about five thousand middle-market leaders in 29 countries - 250 of them being in Brazil.
The study shows that the global average also improved, with 57% of global leaders showing optimism –14 percentage points (p.p.) higher than in the previous edition.
The survey was conducted between October and December of 2020 and covers several indicators, from revenues, investments, employability to perspectives about specific sectors, so that it is possible to reach a general optimism level about the future of the economy and business.
This is a relevant current perspective in the midst of an ever-changing scenario, with research conducted from the beginning of the pandemic-related bans to the easing of restrictions in some parts of the world.
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Main indicators of Brazilian optimism
For 72% there will be an increase in sales and revenue in the next 12 months. This is 21 percentage points (p.p) more than in the previous edition of the survey (51%), released in July, and much higher than the current global average (45%).
80% of the Brazilian business community show interest in increasing investments in technology in the next 12 months, and 68% in Research & Development - a trend certainly driven by the adjustments, innovations, and increase in infrastructure required to support the need to maintain social distance and competitiveness in the market.
52% believe in the growth trend, up from 40% in the last survey, while the global average was 34%.
Optimism in Brazilian companies is also higher than the global average when it comes to employability. There are 66% of respondents confident in the increase of job offers occupying the 2nd place in the ranking, while only 38% of businessmen in other countries, on average, believe in this possibility.
Daniel Maranhão,Grant Thornton Brazil's CEO, evaluates that this growth of optimism regarding the economy in several countries, more accentuated in Brazil, is due, mainly, to the expectation of economic recovery in the next 12 months. The increase in confidence is essential for the resumption of investments and the reduction of country risk so that companies feel safe to make investments aiming at the medium and long term. "The optimism among entrepreneurs has increased, mainly because of the hope in the vaccine against Covid-19, bringing consumption back to pre-crisis levels, and also because of the expectation that the Government and Congress will be able to move forward in the discussion and approval of reforms that will contain the explosive growth of public debt – providing the minimum conditions required for macroeconomic stability – and the continuity of the expansion of the concessions and privatizations regime.
However, the executive warns that "it is important to remember that we are still in a foggy scenario. We do not know for sure if there will be new strains, the potential of vaccines against them, the speed of vaccination in Brazil, and especially if the current Brazilian political environment will allow the approval of important reforms. But, it is fundamental for the country to continue attracting foreign investors, as an alternative to boost the economy more effectively, since government investments are likely to be even more reduced. However, to attract these investors, it is essential that the public authorities do their homework and do not abandon the road to administrative reform and fiscal adjustment that they were following before the pandemic. It is important to be optimistic, but always with our feet on the ground, because the scenario still requires cautiousness".
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The International Business Report (IBR) is published every six months by Grant Thornton and provides relevant information for the competitiveness of middle-market companies. We will also publish additional information from our survey throughout the year.
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