Global economy set for rebound in 2014: Grant Thornton

The global economy is set for a rebound and looks much healthier than it did 12 months ago, says the latest Grant Thornton International Business Report on the global economy in 2014. "The global economy grew by approximately 2.9 per cent in 2013, its slowest rate since 2009. However, a recovery in developed economies is likely to boost global growth to 3.6 per cent in 2014, accelerating to 4.0 per cent in 2015," the report says.

The report points out that the growth in developing economies will continue to exceed that of developed economies. "Growth in developing economies as a whole slowed in 2013, but they are still expected to expand faster than developed economy peers in 2014. The economies of developing Asia, led by China, India and Indonesia, are expected to grow by 6.5 per cent in 2014," it says.

Improving economic outlook, however, has not resulted in more optimism among businesses across the world. In BRIC (Brazil, Russia, India and China) region, for instance, even though the businesses are confident about rising profits (47 per cent), their optimism is significantly lower than it was last year (down by 28 percentage points).

Launched in 1992, the Grant Thornton International Business Report was compiled after interviewing some 3,300 senior executives in listed and privately-held businesses all over the world.

Overall, the report says, business leaders are planning to step up their investment activity in 2014 with net 36 per cent expect to increase spending on plant and machinery over the next 12 months, compared with 31 per cent last year.

But several constraints could have an impact on the future growth plans of businesses globally. These would include economic uncertainty, bureaucracy, lack of talent, shortage of orders and weak demand conditions. In India, for example, 50 per cent businesses cite a lack of talent as a constraint on their growth plans. "Exchange rate fluctuations (37 per cent) and a shortage of finance (32 per cent) are much greater problems for businesses in the BRIC economies compared with peers in the G7," the report says.