Category Archives: Latin America

Business confidence in the Middle East and Africa trailing Europe

Can there be anywhere in the world less confident about its business prospects than Europe right now? Most people would answer that question with an emphatic ‘no’. But, during our recent annual conference in London, we polled the 280 delegates – from all corners of the globe – and got some contrary and interesting views.

36% of RSM members in Europe categorised business confidence in their respective countries as ‘good’ or ‘very good’. Surprisingly, both Africa and the Middle East scored lower than Europe on business confidence, despite many countries in those regions experiencing relatively high levels of economic growth. Just 25% and 22% of accounting professionals respectively in those regions rated business confidence as ‘good’ or ‘very good’.

Needless to say, business confidence is absolutely critical. If businesses do not feel optimistic, they will be reluctant to invest. As we all know, increased capital spending by private businesses will be needed to kick-start growth, but many organisations across Europe are still in cost-cutting mode.

Contrast this with Africa, where many economies are growing strongly. Confidence is relative of course, so it’s entirely possible to be less bullish despite a more favourable economic reality. The fortunes of African economies are closely tied to demand from the U.S., Europe and China, but with demand muted, and commodity prices falling, many African economies are facing growing headwinds.

Within Europe the picture is polarised. Whilst 62% of delegates from RSM Germany rated confidence as ‘good’ or ‘very good’, business confidence from UK delegates is significantly below the European average, with only the Spanish more pessimistic about their economic prospects among major European economies. Just 9% of RSM delegates from the UK ranked business confidence as either ‘good’ or ‘very good’, whereas RSM members from Spain are the most pessimistic among the five major European economies, with none rating business confidence as ‘good’ or ‘very good’.

70% of RSM members in the Americas and 66% in Asia/Asia Pacific rated business confidence as ‘good’ or ‘very good’. It’s a little surprising to see confidence in the Americas higher than Asia, but then Americans are known for their optimism, and with the prospect of energy self-sufficiency in the U.S. a growing possibility, there is good reason for feeling positive. Energy is one of the largest input costs for manufacturing businesses, so the shale gas boom could provide a much-needed competitive boost to U.S. industry.

Looking forward to 2013, 42% of RSM members in Europe think business confidence will decline over the next 12 months. Only African RSM members are less optimistic: just 25% thought confidence would improve, compared to 36% of Europeans.

RSM members have their fingers directly on the pulse of businesses in their respective countries, so this survey provides a fascinating overview of economic vitality. 2012 has been a tough year for the global economy, but there is reason to hope that the prognosis for 2013 will be a little better.

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Filed under Africa, Asia Pacific, Business confidence, Economy, Europe, General, Latin America, Middle East and North Africa, North America

Emerging markets tunnel vision: Don’t forget about Latin America

China’s booming economy continues to grow at a considerable rate and has helped pull much of the global economy away from the worst of the financial crisis. India’s youthful population has also buoyed many Western economists’ forecasts of continued economic growth. This sustained focus on Asia’s economic performance has meant other emerging economies Brazil, in particular, and Russia, to a lesser extent, have found it hard to have a profile in the pantheon of emerging markets. It is as if BRIC has become IC.

Russia has its own economic idiosyncrasies, which have made it less attractive to investors than its Asian counterparts.

Yet markets in Latin America, like Brazil and Mexico, have similar positive growth prospects yet far less profile than Asian economies. Mexico grew at almost 6% in 2010 and its close proximity to the US provides a powerful stimulant to its economy.

Brazil’s economy soared last year with 7.5% growth and it’s expected to grow 4.5% this year. Its population is forecast to hit 217 million by 2030. Resource rich Brazil today is a major world supplier of commodities and natural resources. The country will also now play host to two of the world’s largest international sporting events – the World Cup in 2014 and the Olympics in 2016 –   global events which will perhaps give this emerging economy the global recognition it deserves.

While China and India will remain vitally important markets, the likes of Mexico and Brazil should not be overlooked. Recovering economies and strong links with the US mean these two countries will continue to provide significant investment opportunities as their financial markets mature. We need to banish the emerging markets tunnel vision and remember the opportunity in Latin America.

Click here to listen to the BBC’s report on the prospects for Brazil’s economic boom continuing.

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Filed under Asia Pacific, Economy, General, Latin America, RSM Regions

Propelling growth in Malaysia

Recently I had the pleasure of spending time with my colleagues in Malaysia celebrating the 33rd anniversary of our member firm RSM RKT Group, with staff and clients of the firm. Many congratulations to the RSM team in Malaysia on this great occasion.

Malaysia is going through an exciting period at the moment. The Malaysian Governments’ Economic Transformation Programme (ETP) is effectively propelling Malaysia into becoming a high-income developed nation by 2020. The process for transformation is focusing on key growth areas such as energy, tourism, business services, wholesale and retail, and of course the financial sector – a key enabler and catalyst of economic growth. They are aiming for growth of 6% to achieve this and are well on track with some economists predicting 5.1% GDP this year.

While I was there I was interviewed by Business Times, you can read the article here.

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Filed under In the news, Latin America, News

Progress in Panama

There is no doubt that business in the Latin American region is exciting at the moment, as large global businesses are jockeying to invest in the growth markets spread across the continent.

Just take a look, for example, at that narrow body of land separating the Atlantic from the Pacific at the upper end of South America.  This is where a huge percentage of the world’s goods in transit already pass through the Panama Canal. 

Built at the end of the 19th century, the Canal is now undergoing a very impressive $5.25 billion expansion to accommodate more and much larger modern cargo ships that currently must travel around Cape Horn at the southern tip of South America to reach their destinations.

Now add to that the recent Sino-Colombian agreement for a new railway across Colombia linking the Atlantic and Pacific. The proposed 220 km railway, sponsored by the Chinese, is on the drawing board.

The textbook issue for large infrastructure projects is whether there will be a strong-enough demand, and whether a trans-Colombian railway will really be more efficient and attractive than transiting via the Canal. But there can be no doubt that this vast increase in infrastructure will stimulate commerce and result in enormous growth in logistical and related services and suppliers in a concentrated zone that heretofore has been a tropical area of limited economic focus.

 In Panama RSM International has a new correspondent firm that is well-suited to serve the needs of global companies today and in the future. De Levante y Asociados, based in Panama City, was established in the 1950’s, and has evolved into a modern and sophisticated firm. They have the depth and breadth of experience which is essential for companies looking to establish or expand in this exciting region.

Panama and its canal will remain crucial to the health of the world economy and free flowing trade. I can foresee the increased demand in global trade will probably mean both the Canal and the trans-Colombian railroad will be kept busy in years to come.

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Filed under Latin America, RSM Regions