KPMG survey shows confidence higher in Brazil than in the BRIC countries and Europe.

By: O Estado de S. Paulo
More than two out of three industrial companies in Brazil are optimistic about the business outlook for the next twelve months, according to a survey released by consultancy KPMG last Monday.

The level of optimism in Brazil was the highest expressed by businesspeople in the four emerging countries known as BRIC - Brazil, Russia, India and China ? and exceeded the percentages observed in another survey carried out by the consultancy amongst European businesses.

According to KPMG, 67.8% of the companies in Brazil expressed optimism about the next twelve months, compared with 28.3% that expected the outlook to be the same as it is now, and 2.9% who expected it to get worse.

"With the levels of activity indicating an increase, Brazilian companies are planning to take on more staff", said the authors of the survey

"The forecast for capital spending and research and development are also higher than in the survey carried out at the beginning of the year, because solid profit growth supports higher levels of investment."

BRIC
The survey was done amongst 1,800 companies in the four BRIC countries. In Russia, 55.7% expected things to improve in the next twelve months, compared with a 6% expecting a decline.

In China the figures were similar: 55.3% and 8.7%, respectively.

In India businesspeople were more cautious than the rest of BRIC, with 38.5% having high expectations for the next twelve months, and 16% expecting a decline.

The director of the KPMG branch for fast-growing markets, Ian Gomes, said the "robust" growth in BRIC will be based on domestic demand, the success of stimulus packages adopted by the governments and signs of global economic stabilization.

"The faster growth will be accompanied by a return to inflationary pressures as demand for raw materials grows and companies recover some of their capacity to dictate prices", said Gomes.

For Gomes, such pressure will be moderate compared with the high levels seen in 2008.

Europe
I a separate survey, but with an identical theme and methodology to the one carried out for BRIC, KPMG consulted 3,700 European companies on their expectations for the next twelve months.

On the continent as a whole, the percentage of optimistic companies exceeded pessimists by 28 points. Great Britain (with a difference of 54%) and Italy (49%) led the list and were the only ones that exceeded the European average.

Germany (24% difference), Austria (22%) and France (18%) followed on in the list.

Only in the Czech Republic and Greece did the pessimists exceed the optimists.

The director of KPMG, Alan Buckle, said that there are many reasons for a "return in confidence in the industrial heart of Europe", but he stressed there are also reasons for caution.

"Before we get carried away by the signs of recovery, we must not forget that we are still firmly inculcated close to the bottom of the economic cycle. Only Great Britain expressed optimism in regard to jobs, and there are still signs of a reduction in investment", said Buckle.

"The fact that optimism is much less in evidence as regards the outlook for increased income tells us that there is still a long way to go on the road to recovery."