Optimism among South African business owners is on the rise and remains well above the global average, the International Business Report (IBR) index by Grant Thornton has revealed.

The IBR shows an optimism balance of 64% for 2011, representing a 4% increase on last year’s index.

The positive local index contrasted with the global optimism balance of 23% for 2011, which compares with 24% for 2010.

The ‘optimism balance’ is the proportion of business owners reporting that they are optimistic less those reporting that they are pessimistic.

Grant Thornton South Africa chairperson Leonard Brehm said that South African business owners continue to be optimistic about the nation’s economic landscape for the year ahead, despite expectations that the strong rand would continue to make business conditions tough for some, particularly those with an export focus.

Western Cape business owners were the most optimistic with a 72% balance, while Eastern Cape recorded the lowest optimism balance of 52%. KwaZulu-Natal scored 69% and Gauteng 62%.

Brehm reported that South African business owners were expecting continued growth in turnover in 2011, with a 65% optimism balance compared with the global mean of 56%.

Another positive trend expected in South Africa during 2011, was a significant increase in selling prices, with local business owners recording a 56% optimism balance for the year ahead, compared with the 2010 figure of 46%. The global optimism balance for selling prices in 2011 is 28%, up from 11% in 2010.

“Considering the current strength of the rand and low inflation, this optimism seems unusual,” Brehm said.

However, local business owners were less hopeful for investment in buildings in the year ahead. This trend recorded a decline since 2010, with investment in buildings at 17% for 2011, down from 25% in 2010. Brehm attributed this pessimism to the significant retrenchments experienced in the construction sector over the past two years.

“The decline for investment in buildings could indicate tough times ahead for the construction industry. The 2010 FIFA World Cup infrastructure and construction boom experienced during 2009 and 2010, may also have something to do with the pessimistic outlook in terms of construction projects for 2011,” he explained.

Expectations for investment in new staff for 2011, highlighted very different degrees of optimism on a regional level. South Africa’s overall 30% optimism balance featured an optimistic Western Cape with 42%, while the Eastern Cape region is less optimistic about employment prospects in 2011, recording just 16%. Gauteng’s employment optimism rated at 33% and KwaZulu-Natal at 26%.

“Business owners in South Africa seem, on the whole, optimistic about the economic conditions for the year ahead. We can only hope that the postrecession upturn results in sustainable business growth for dynamic organisations nationwide,” Brehm noted.

Globally, confidence levels regarding economic performance were higher in Latin America than any other part of the world, as the region leads the way on business optimism into the New Year, according to the 2011 report. This is the first year that Latin America has led the world on optimism with a balance of 75% of privately held business owners expressing optimism about their region’s economic performance in 2011.

Optimism in the Asia Pacific region was at 50%, while it was just 26% in North America, with Europe the least optimistic region at 22%.

The IBR survey, which is now undertaken on a quarterly basis, focuses on midcap listed and medium to large privately held businesses.