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The political and economic turmoil as well as natural disasters that dominated 2011 has affected businesses across the globe, slowing the recovery in both mature and emerging markets.

In its International Business Report (IBR), Grant Thornton notes that in 2011, expectations of business performance – how much businesses are selling and how this is affecting their bottom line – have fluctuated along with wider economic expectations; an indication of how the uncertainty in the global economy is damaging business growth prospects.

However, expectations for profitability have shown the strongest increase year-on-year.

Businesses in emerging markets dominate the top spots for profitability expectations, with Vietnam (90%) followed by India (79%) and then Mexico, Philippines (both 68%) and Brazil (66%).

The report also notes that with businesses cautiously sitting on cash and global trade slowing, growth prospects in mature markets look weak.

IMF forecasts show advanced economies growing by just 1.6% in 2011, and 1.9% in 2012, anaemic growth in comparison with pre-crisis levels. With the global economy forecast to expand by around 4% in both 2011 and 2012, growth is being driven by emerging markets. As a group these are expected to grow by 6.4% in 2011 and 6.1% in 2012.

Despite an uncertain economic climate the majority of businesses remain optimistic for the outlook of their country’s economy over the next 12 months, led by emerging economies – India (+86%), Chile (+85%) and the Philippines (+85%).

Over in Japan, confidence remains low (-67%) where existing economic challenges have been compounded by the fallout from the earthquake and tsunami in March this year.

Businesses in the Latin American economies of Argentina, Brazil, Chile and Mexico look well placed for growth moving in to 2012 with both strong order books, and higher revenue expectations.

Other emerging economies such as India, South Africa and the Philippines also look set for a strong 12 months, as well as those European countries which, at least initially, recovered quicker from the downturn: Germany and Sweden.

By contrast, businesses in the PIGS (Portugal, Ireland, Greece and Spain) economies expect another tough year in 2012. They are joined by three other European countries – France, Switzerland and Poland – and Japan in a group of countries where prospects for business growth look weakest.

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