BRIC Countries Ready for Rapid Economic Expansion; MERGING MARKETS MAZARS

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Byline: By Duncan Tift Business Staff

Countries in the BRIC region - Brazil, Russia, India and China - have expressed confidence in their prospects for the year ahead, despite the slowdown in established world markets such as the US and Western Europe.

The spring 2008 KPMG Business Outlook Survey, which surveys around 1,400 service sector firms across the BRIC region, showed the majority felt there were major opportunities for growth - although the figure is not as high as six months ago.

The survey also shows service providers are confident that revenues will rise over the coming year, with 61 per cent predicting an increase. Higher new orders, improving market conditions and the introduction of new products were cited as the main factors likely to support growth of revenues.

The principal threats to revenues were perceived to be intensifying competition, rising input costs and weaker economic conditions.

Volumes of new business placed with BRIC service providers are expected to rise at a marked pace over the coming year. Growth of new work is anticipated at 58 per cent of companies, while less than three per cent forecast a fall.

Company profitability at BRIC service providers is predicted to increase strongly over the next year, with well over half of survey respondents anticipating a rise. Again, Indian firms were the most optimistic regarding profits.

Higher profits are also set to underpin increased investment in capital, however, optimism was down slightly on last year mainly reflecting a softening in Brazil.

In addition, higher workloads are predicted to boost job creation across the BRIC nations, with around 37 per cent of service providers anticipating employment growth. Russian and Indian firms are the most upbeat. Outsourcing is also expected to increase.

Negative factors to growth are seen as increased operating costs, mainly due to escalating raw materials, dearer energy costs and rising salaries. Inflationary expectations were particularly high in Russia. …