BRIC service sector looks optimistic: KPMG survey

10 Aug 2009

The service sector in BRIC region (Brazil, Russia, India and China) looks more optimistic after the financial crisis last autumn, the spring 2009 KPMG Business Outlook Survey showed.

According to the KPMG report, which surveyed around 1,400 service sector firms across various regions, Brazil is the most optimistic, while India and China are almost at par in job creation.

The survey found the service sector firms giving a better assessment of conditions since the global crisis emerged after the collapse of Lehman Brothers. The confidence levels are, however, below the buoyant levels seen prior to the financial maelstrom, according to survey results released by KPMG.

"The improved sentiment is encouraging and reflects the fact that many sectors have a significant dependency on the domestic market and have been positively impacted by lower interest rates, lower inflation and improved liquidity. The outcome of the national elections and the monsoons will in the next few months determine how this trend develops," Russell Parera, CEO, KPMG in India, said.

The net balance of firms forecasting growth of activity over the next twelve months has risen from +33.8 to +43.5. Optimism is highest in Brazil, while confidence has also rebounded strongly in Russia and India. However, sentiment in China has eased a little compared with the previous survey (although it remains highly positive). At the sector level, hotels and restaurants are the most bullish regarding activity, the KPMG release said.

Companies are anticipating faster growth of both new business and revenues during the next twelve months. Anecdotal evidence highlights stronger market demand as the principal factor underlying confidence. Correspondingly, optimism regarding profits has also increased since the previous survey, as signalled by the net balance climbing from +26.4 to +36.2.