Martin Stabe Barometer poll shows business wary of Brics

With more than a year’s worth of of data from our exclusive business sentiment poll, the FT/Economist Global Business Barometer, now available, some interesting longitudinal patterns are becoming apparent for the first time.

Most notable among them is the steady erosion over the past year in executives’ perceptions of the “business friendliness” three of the world’s biggest developing economies, India, China and Brazil.

Each quarter, the Economist Intelligence Unit, which conducts the online survey from a global panel of business executives, has asked respondents to rate the “business-friendliness” of the G7 and Brics nations on a five-point scale. This chart ignores the neutral respondents and groups the rest into broad classes of respondents rating each country on the “friendly” or “unfriendly” side of the scale.

The case of India has been particularly stark. While 45 per cent of respondents rated India business-friendly a year ago, that figure has slumped to 28.6 per cent in the most recent survey, published on Thursday. Perhaps reflecting scandals and controversies over the scrapped plan to liberalise of foreign investment in retail, respondents saying the Indian government is not business-friendly, has quickly grown from 24.8 per cent a year ago to 35.2 per cent today.

A year ago, views on China’s government were split, with slightly more executives rating its business friendliness positively than negatively. Now, just 26.3 per cent say China is friendly towards business, while nearly 40 per cent say it is unfriendly. The change in Brazil’s business-friendliness rating is less pronounced, but also on a gradual downward trajectory.

The fourth member of the Brics club, Russia, was consistently rated as unfriendly towards business throughout the year. By contrast, executives’ perception of the governments of Britain, Canada, Germany, and the US have remained consistently positive over the course of the year.

Two eurozone countries, France and Italy, have also seen significant changes in their business-friendliness rating. Italy’s business friendliness rating has been recovering from a sharp decline a year ago. Respondents’ views on the French government, meanwhile, have grown more polarised, with a steadily growing proportion of respondents rating it as unfriendly towards business. Given business wariness of new president François Hollande, it be interesting to see whether France’s business-friendliness rating tips into net-negative territory when our next Barometer is published in August.