This is the first of four articles on Grant Thornton’s global research, covering H2 2020. We begin with an introductory framework for understanding the report, then continue the series with a summary of the worldwide findings, followed by examinations of the data from the APAC region. The series will conclude with a focus on Thailand specifically. Along the way, we’ll give a general overview of the present opportunities and concerns for business, as indicated by current data.
As with previous surveys, the new report highlights relative levels of business confidence across several categories, while also exploring the expected impact of various challenges and opportunities for the private sector. As we enter 2021, however, it seems necessary to address a number of questions that may come to mind when discussing such a topic. Namely:
- Aren’t the survey questions essentially just a proxy for predictions about how quickly the virus will be overcome?
- Haven’t we all learned by now that the current period is fundamentally unpredictable?
- What actionable lessons can be learned from statistics about current business sentiment?
Let us return to these questions from a slightly different angle, while also explaining a bit about the methodology of the study.
The meaning of optimism in an age of unpredictability
As we look back on 2020, we can see how eventful it has been for the entire world and therefore how hard it is to predict the future with confidence. From widespread economic insecurity to the awakening of social movements from all over the political spectrum, to plenty of finger-pointing about both the origins of COVID-19 and the subsequent response to it, there remains considerable potential for a wide variety of outcomes. If nothing else, however, we need to learn to react and adapt quickly to an ever-changing new norm.
CEO and Managing Partner Ian Pascoe underscored this point, while also referencing the logic behind private sector optimism even amid uncertainty:
Ultimately, Grant Thornton’s global research efforts are a compilation of best estimates about the direction of the private sector moving forward. Yet recent history reminds us that the world is less predictable than we tend to believe.
This observation leaves us with two ways to interpret the data. The first is that companies expect the economic situation to improve in the near term, opening the door once again to significant growth. This very well may be the case, and indeed we all hope things go in that direction. But with new outbreaks making headlines even as we speak, it’s hard to avoid the impression that this outlook leans rather heavily on ‘hope’ as the operative word.
The other interpretation is that businesses around the world now realise the importance of agility, and have implemented – or are implementing – more flexible processes that will allow them to thrive even if conditions do change again, as they likely will. Agility is a prerequisite for adaptation, and there’s no more important quality to have in this era of disruption.
Indeed, all evidence suggests that we’re entering a K-shaped recovery period, where post-pandemic growth rates reveal widening gaps even within industries. Agile and well-adapted businesses will rebound quickly along the upper arm of the ‘K’, particularly as the spread of the virus slows.
By contrast, companies that fail to update their strategy and technology for the new environment are likely to find themselves following the lower arm of the ‘K’, and in real trouble moving forward, because they are mis-aligned with the current and future direction of their industry. Business leaders who show optimism may in fact be encouraged by their own success at adaptation, rather than simply predicting that the pandemic will end soon.
This understanding gives us a valuable lens for interpreting the data, which we will present in the articles that follow. From measurements of overall optimism to concerns about specific business constraints, the report offers a look at the landscape many companies now see in front of them.
It is worth stressing that businesses are by no means passive players in this game. If a close inspection of your company reveals that it is overly reliant on external factors for its good fortune, or you find your company continuing to aim at old targets, a new organisational strategy may be worth looking into.
The study, formerly known as the Grant Thornton International Business Report, is conducted twice per year. More than 5,000 mid-market businesses across 29 economies are surveyed worldwide, using both online and telephone interviews to gauge business sentiment among chief executive officers, managing directors, chairpersons, or other senior executives from all industry sectors.
This research was conducted from October to December 2020 – a notable range of dates, as the US election results were reported within this time window, along with the first news of a positive coronavirus vaccine. The report was compiled before the December announcement of a deal between the UK and the EU on the Brexit issue, before a new strain of the virus was identified in the UK, and before the recent increase in cases in Thailand and elsewhere in the world.
With those thoughts in mind, let’s see what the data tells us about the road ahead.
Part 2 of this series will follow shortly.