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16% of Singapore firms less likely to do business in Europe even after crisis

Singapore businesses identified top 4 wish list for government to do to stimulate economy. 

Four in ten businesses globally say the eurozone crisis has had a negative impact on their business, according to the latest Grant Thornton International Business Report (IBR). This is estimated to have wiped US$2trillion off revenues globally1. With the crisis still rumbling on, the research also highlights the long-term damage to the prospects of the EU as businesses consider doing less trade in the region in the future.

Aw Eng Hai, Partner of Foo Kon Tan Grant Thornton LLP said “Businesses are losing money and their growth prospects are suffering, not just in Europe but across the globe. As one the region’s most open and export dependent economies, Singapore is definitely not insulated considering the Eurozone is the largest buyer of Asian exports outside the US. 

Although 70% of businesses in Singapore are concern that the on-going crisis may escalate to a global recession, businesses here can take some comfort when Mr Tharman Shanmugaratnma , Deputy Prime Minister and Chairman MAS said that the Government will stand ready to act should conditions take a turn for the worse” with an added assurance that “…sound businesses continue to have access to financing…”

When asked what they like their governments to do to stimulate the economy, findings show Singapore businesses rank employment policy, tax breaks, fiscal and monetary measures as top 4 wish lists for the government to look into. According to the IBR, the impact of the eurozone crisis on business revenues has been severe: globally, more than half of those negatively affected (54%) say their revenues have dropped by more than 3% as a result of the crisis, with Asia Pacific region showing slightly higher (56%) decrease. In the United States, the world’s largest economy, 11% of businesses
say the crisis has caused their revenue to fall by 10% or more.

Paul Raleigh, Global leader of growth at Grant Thornton International, said: “It’s tricky to pin an exact figure on the total revenue lost as a result of the eurozone crisis. But our calculations, based on the IBR results and the proportion of global GDP accounted for by corporate revenues, suggest that businesses have lost close to US$2trillion as a result of the crisis.

Although businesses in Europe have suffered the most acute effects of the eurozone crisis, the IBR reveals that the impact has spread widely and had considerable effect in other regions. Around one in three business leaders in the BRIC economies (36%), Asia-Pacific (34%), North America (31%) and Latin America (30%) cited a negative impact.Perhaps more worryingly, 17% of businesses globally now say they are less likely to do business in Europe as a result of the crisis. This compares with just 10% when businesses were asked the same question about the Middle East & North Africa in 2011 following the
Arab Spring. Some of those most likely to stay away from Europe are businesses from Philippines (50%) by far the highest with Japan and Canada (5%) at the other end. 16% of Singapore businesses, Vietnam (28%) China (25%), share the same view, with South East Asia (24%) and Latin America (18%).

Interestingly, many businesses in Europe are thinking the same thing; 27% of businesses within the eurozone are now less likely to do business with other members of the currency union.

The concern is that the longer the crisis drags on, the greater the long-term damage to the reputation of Europe as a trading partner. If businesses in some of the fastest growing economies of the world begin to look elsewhere for the technology and skills to help them grow, then Europe will find it even harder to move past its current problems. Taking a positive look, Eng Hai added “The willingness of eurozone businesses to look

further afield for opportunities is encouraging. And it is also worth stressing that Europe remains home to the world’s largest single market, has enviable infrastructure and boasts some of the most dynamic business environments in the world . The key is a swift resolution to the crisis which will remove the uncertainty and give businesses, in Europe and worldwide, the confidence to begin investing in the future and return consumer confidence.”

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