Factors clouding outlook include worries about fuel costs, general election, limited pricing power, currency volatility

What are some of the concerns weighing on the confidence of companies globally? According to IHS Markit’s recent Global Business Outlook survey, the big worries are political issues, cost pressures and currency instability.

This is based on a survey of around 12,000 manufacturers and services providers who were asked to give their thoughts on future business conditions. The reports were produced on a tri-annual basis, with data collected in February, June and October. The latest survey was conducted between 12 and 29 October.

Not surprisingly, Indian companies were no exception to this trend. In fact, business sentiment in the country was weaker than the average in emerging markets as well as globally.

The factors clouding the outlook for the future include growing worries about input costs— particularly for fuel, the general election, competition, limited pricing power and expected currency fluctuations.

Consequently, confidence regarding business activity in the next 12 months slid to the weakest in almost one-and-a-half years. Expectations on profits and investments have dropped as well. As the chart shows, in all three cases, sentiment levels are below their respective global averages.

Commenting on the India Business Outlook survey data, Pollyanna De Lima, principal economist at IHS Markit, said: “The growth slowdown is predicted to be accompanied by strong inflationary pressures, but the gap between the input costs and output prices net balances suggests that companies remain worried about their ability to pass-through to clients’ additional expenses without losing market shares.”

Meanwhile, in this gloom, one silver lining was India Inc.’s hiring plan. According to the survey, hiring intentions among Indian companies were revised to reach a three-and-a-half year high.

source: livemint.com