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Friday 23.03.2018 | Name days: Mirdza, Žanete, Žanna

Russian entrepreneurs go from being optimists to absolute pessimists

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe number of entrepreneurs who believe economic growth will improve in the next 12 months has decreased greatly in the world. This has been concluded during the annual economic forum in Davos, Switzerland.

Entrepreneurs in the world are now less optimistic about the potential of global economic growth than last year. Only 37% believe economic growth will continue in 2015. What is notable is the fact that the number of entrepreneurs who believe global economic growth with decline has doubled – 17% of all interviewed entrepreneurs. The remaining 44% believe the economic situation in world will remain the same.

There is some difference among different regions. For example, entrepreneurs in Asia and the Pacific Ocean are the most optimistic – 45% there believe economic growth will continue to improve. Businessmen in the Near East (44%) and North America (37%) believe the same. Europeans are the most pessimistic – only 16% in Central and Eastern Europe believe the situation will improve.

In spite of the ruling pessimism in regard to global economic growth, entrepreneurs remain largely confident about their chances to increase revenue. 39% of all respondents are certain about their company’s chances to increase revenue in the next twelve months. This index has slightly increased in comparison with 36% last year.

Entrepreneurs in Asia and the Pacific Ocean region (45%) are the most confident. The Near East remains one of the most optimistic regions in the world – 44% of entrepreneurs there are confident about their company’s chances to increase revenue in the near future. Confidence is on a rise in North America as well – an increase of 43% from 33% has been noted there. Entrepreneurs in Western Europe (31%) and Eastern Europe (30%) are the least optimistic about their company’s perspectives this year.

Looking at results in a perspective from country to country, entrepreneurs in India are the most optimistic – 62% are very confident about their financial capabilities. They are followed by Mexico (50%), Australia (43%), UK and South Africa (39%), China (36%), Germany (35%) and Brazil (30%). The least optimistic entrepreneurs are found in France (23%), Venezuela (22%), Italy (20%), Argentina (17%) and Russia. Only 16% of entrepreneurs in the latter country expressed certainty about 2015. Compared to 2014, Russian entrepreneurs have gone from being the most optimistic in the world to the most pessimistic.

According to the Chairman of PricewaterhouseCoopers International Dennis M. Nally, the world currently faces big challenges – social, economic and political. Entrepreneurs remain cautious when looking at economic development. The world is now in a situation when experienced markets like USA have begun to recover and Eurozone remains in recession. Emerging countries continue to rapidly grow. Economic development rates of other countries, on the other hand, continue to decline. The greatest challenge at the moment is finding balance and long-term development perspectives.

For the first time in the history of the survey, entrepreneurs have mentioned USA as the most important market for their company’s development in the next 12 months, putting China second. In general, 38% of entrepreneurs believe the market of USA will secure economic growth for them, 34% believe China will play this role, 19% believe in Germany and 11% – in the UK and Brazil.

Entrepreneurs say they plan to employ a number of business strategies in order to strengthen their company’s capabilities in the next 12 months: 71% will work on reducing expenses, 51% plan to form strategic alliances or merge with others, 31% plan to use outsourcing services and 29% plan to perform merging or business acquisition deals.

Excessive regulation is the main reason for concern – 78% of respondents put t as the main reason for worries. Countries that are under the risk of introducing excessive regulation include Argentina (98%), Venezuela (96%), USA (90%), Germany (90%), UK (87%) and China (85%).

Other concerns include the lack of qualified workers (73%), fiscal deficit and credit burden (72%) and geopolitical uncertainty (72%).

One-third of all interviewed entrepreneurs have said their company has recently thought of entering a new industry. 56% believe competition will rise in their chosen sector in the next three years. Entrepreneurs believe competition will increase or has already increased on the following industries: technologies (32%), retail trade and wholesale trade (19%), communications, entertainment and media sectors (6%).

Entrepreneurs also believe their host countries should secure competitive and effective tax administration systems (67%). 20% of entrepreneurs believe their countries are successful in the introduction of effective tax administration systems. The same situation is present with qualified workers. 60% of entrepreneurs note this as a reason for concern, while 21% admit their countries have an adequate number of qualified workers. Among other priorities of different government, entrepreneurs mention better infrastructure (49%), capital availability (29%) and digital infrastructure (28%). Only 6% of respondents mention challenges caused by climate change.

The rise of digital technologies has completely changed how business works nowadays: 58% of entrepreneurs are concerned about the speed of development of such technologies. 81% of entrepreneurs believe mobile technologies as the most important for their company, followed by data processing (80%), cyber security (78%) and cloud services (60%).

Half of respondents say they plan to increase the number of employees in the next twelve months. 21% plan to decrease the number of their employees. Challenges still include finding the ‘right’ people – 81% of respondents say they are looking for people with a wide range of skills. 64% of entrepreneurs employ a diversity and involvement strategy.

A total of 1,322 entrepreneurs from 77 countries of the world participated in the survey in 2014.


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