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Latin SME’s Optimistic

Colombian companies are most optimistic, while Argentine SME's are most pessimistic about their outlook.

BY CHRONICLE STAFF

Latin American small and medium-sized enterprises (SME's) are less optimistic about the future than before, but a surprisingly high number of them still remain upbeat, according to a new pan-regional survey conducted for U.S.-based logistics giant UPS.

The third UPS Business Monitor Latin America (BMLA) shows that 47 percent of the respondents believe the economic position of their company will be better during the next year. Only 20 percent said it would be worse, while 30 percent said it would be the same.  The remaining 3 percent said they did not know or had no opinion.

“The results from the latest BMLA study demonstrate that although Latin American SMEs are enduring a difficult business climate, they are looking forward to continued growth down the line,” Stephen Flowers, UPS Americas President, said in a statement.

The survey among 905 decision-makers was done between November 18 and December 23, 2008. While that was before the latest round forecasts of GDP decline in Latin America this year, they show surprising optimism even at a time of growing economic uncertainty. The last two months in 2008 were full of negative news out of the United States and growing concern in Latin America about the fallout of that meltdown.

 

The survey was conducted by TNS Gallup Argentina and included interviews in eight countries: Argentina, Brazil, Chile, Colombia, Costa Rica, the Dominican Republic, Mexico and Venezuela.

However, the latest survey does show less optimism than before. In last year’s survey, 84 percent of respondents expressed optimism, while only 2 percent thought the outlook looked worse.

COLOMBIAN OPTIMISTS

Colombian companies were the most upbeat, with 62 percent optimistic, while only 10 percent were pessimistic. Brazil and the Dominican Republic followed, with 54 percent of companies in both countries feeling good about the outlook.  In Costa Rica 51 percent expressed optimism, while only 9 percent were pessimistic.

Both Mexico and Venezuela came in with surprising numbers. In Mexico, which depends heavily on the US economy, a surprising high number of companies expressed optimism – 45 percent versus 20 percent that were pessimistic. Similarly, 46 percent of Venezuelan companies were upbeat versus 18 percent that expressed fears of a worsening outlook.

Chilean companies were among the least optimistic – only 37 percent thought the outlook was better, while 21 percent that it would get worse.

Argentinean companies were the most pessimistic by far. While 35 percent expressed the belief that the outlook would get worse, only 20 percent said it could get better. Argentina was the only country where the pessimists outnumbered the optimists. Another 42 percent thought the outlook would remain the same, while 4 percent had no opinion.

WORKFORCE

Overall, the Latin American companies surveyed planned to keep their workforce intact (59 percent), while 28 percent planned to increase it and only 11 percent planned cutbacks. Brazilians were the most upbeat. There, 38 percent of the companies planned to boost staff. In Argentina, only 14 percent planned to do so – the same figure as the percent of companies that planned to lay off people. However, over half -- 51 percent—expect to have problems finding qualified candidates to fill open positions.

Interestingly enough, Argentina is also the country where respondents believe the U.S. meltdown will have the least effect, meaning that other factors influence the pessimism. Argentina has suffered the past year from growing inflation, reduced foreign investment and a series of farmers’ protests against government policies.

While 73 percent of Mexican companies say the weakening U.S. economy hurts their business, only 58 percent said the same in Argentina.

Most of the respondents in Latin America – over 61 percent -- believe the U.S. economy will rebound next year.

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