Press Release
Grant Thornton’s International Business Report reveals challenges for global expansion
21 Oct 2022
Desire for continued export expansion among mid-market businesses remains near record highs, with 44 per cent of respondents in Grant Thornton International’s latest International Business Report (IBR) research anticipating expansion in the next twelve months globally, despite facing some of the highest inflation rates seen for decades.
The IBR data reveals that with historically high inflation, major shifts in the global landscape, and anticipated recessions in many countries, businesses around the world are reassessing their expansion plans.
These shifts have contributed to rising economic uncertainty, with 63 per cent of IBR respondents citing economic uncertainty as a major constraint to growth, closely followed by energy costs (62 per cent) and labour costs (57 per cent).
As a result of the IBR research, Grant Thornton has identified four key trends:
Appetite for international expansion remains strong within the mid-market
Despite the uncertainty that exists, 42 per cent of respondents expect to increase both their international revenue and the number of countries they sell to, and 58 per cent of mid-market businesses expect to increase revenues over the next twelve months. These businesses are allocating more resources to international expansion despite the ongoing challenge of volatility in foreign exchange markets.
Global trade routes and supply chains are reshaping geographic and political lines
While increased international activity is expected, many mid-market businesses are shifting from their traditional trade routes, reshaping supply chains as new deals are struck along political lines and companies try to reduce risk.
International plans and pressures differ markedly across regions
Regions are responding differently depending on their local political, social and economic views. Globally we are currently experiencing very high interest rates, resulting in companies reducing margins and having difficulties remaining competitive. As people continue to face economically tougher times moving into 2023, the IBR data suggests it is likely this will suppress domestic and foreign investment.
Inflation is still rising, and mitigating its impact is central to international success
In attempts to mitigate rising costs, more than half of respondents (53 per cent) predict their selling prices to increase in the coming months. While passing costs on to consumers may work while demand is strong, businesses should think about the repercussions when demand decreases, and inflation eventually falls.
Michael Pittendrigh, National Managing Partner – Consulting and Private Business at Grant Thornton said, “It’s no surprise as businesses come out of the COVID-19 bubble, the appetite for expansion will increase. Businesses should look to capitalise on the opportunities ahead but remain cautious of rising interest rates and the possibility of a recession.”
You can read the full report New globalisation: reshaping supply chains and evolving trade routes on Grant Thornton International’s website.
** Research methodology of the Grant Thornton International Business Report (IBR)
Grant Thornton’s International Business Report (IBR) is a survey of both listed and privately held businesses. The data for this release is from interviews conducted from May to June 2022 with chief executive officers, managing directors, chairperson or other senior executives from all industry sectors. Launched in 1992, the IBR now provides insight into the views and expectations of around 10,000 businesses across 28 economies.
Experts / Authors
Mikala Spark
Senior Communications Manager at Grant Thornton Australia
