SMEs across the globe showed increasing confidence, led by the emerging markets, demonstrating steady signs of recovery in the first half of 2010.
Shaun Wallis, Global Head of Business Management, Commercial Banking, says: ‘Our research indicates confidence levels across the globe and particularly in the emerging markets are stable and are back to pre-financial crisis levels. Whilst it may be tempting to argue emerging nations will be affected by the weakening Western economy, we think that there are three important channels that suggest the emerging markets will continue to grow.
‘The first is related to trade. Emerging nations trade with each other and are therefore less exposed to the Western economy. The second is the low return on Western assets which will encourage investors to put more money into the emerging world. Driven by high commodity prices, the final is the major redistribution of income from the Western markets into the emerging nations.’
The semi-annual HSBC Small Business Confidence Monitor gauges the outlook of SMEs on local economic growth, capital investment plans and recruitment. The latest wave is the largest international survey of its kind covering over 6,300 SMEs across 21 markets in Asia, the Middle East, Europe, North America and Latin America.
Global levels of confidence
Confidence increased across the globe from 111 to 118, with emerging markets (122) appearing seven points higher than developed markets (115). Compared to the previous results in 4Q09, the developed markets increased from 106 to 115 (9 points) showing signs of increased positivity within the developed markets.
Most markets across the globe held a positive outlook, with Turkey leading at 138, followed by the Middle East (132), Greater China (121), India (121), South-East Asia (119), North America (119), Latin America (118) and Europe (99). Compared to the previous results in 4Q09, Turkey showed the biggest jump in confidence up 21 points, followed by North America (up 12 points) and the Middle East (up 7 points).
Outlook on local economic growth
In terms of economic growth over the next six months, 84 per cent of SMEs have a positive outlook with over a third (34%) of SMEs globally expecting growth to increase and half (50%) expecting the current pace of growth to maintain. In Turkey, 56% of SMEs expect the pace of growth to increase, as do 49% in the Middle East, followed by South-East Asia (47%), North America (30%), Latin America (28%), India (27%) and Greater China (24%). In Western Europe, only 10% expect the pace of economic growth to increase.
Outlook on capital expenditure
The majority (87%) of SMEs across the globe are planning to increase (41%) or maintain (46%) their current capital expenditure plans in the next 6 months. The leading regions planning to increase capex include Turkey (52%), Middle East (50%), South-East Asia (46%), Latin America (43%) and Greater China (36%).
Outlook on recruitment plans
Ninety-five per cent of SMEs will either expand their workforce (26%) or maintain their current staffing levels (70%) in the next six months. Only five per cent are planning to cut staff. Notable hiring increases are planned by 41% of SMEs in Turkey, 35% in the Middle East and 31% in South-East Asia.
Wallis says: ‘While the emerging markets remain the most confident, it is interesting to note the significant increase in confidence levels amongst the developed markets. It is encouraging to see that despite global economic uncertainty, small businesses around the world remain confident and continue to invest and recruit. Forming a vital part of the local economy, the collective impact of small businesses is significant. With our international footprint and local expertise, HSBC continues to provide small businesses with an ideal platform to grow and look for new business opportunities.’