US President Barack Obama welcoming President Luiz Inácio Lula da Silva of Brazil to the Oval Office in March 2009 - - In Brazil, business optimism is exceptionally strong. The country, which has been demonised in recent years by protectionist Irish farmers, has benefited from the inspired leadership of Lula, a former trade union leader. The economy is forecast to grow 6.1% in 2010, bolstered by rising domestic demand, increasing exports and higher investment, according to Banco Bradesco, the country’s second-largest bank by market value. Transcript of interview with the FT, Nov 09, 2009.

Global business confidence has surged across virtually all geographies and industries and in particular in the US and the BRIC countries, according to the latest Business Outlook survey from KPMG International.

The latest figures - -  which reflect confidence in expected performance over the next 12 months - -  suggest that recent signs of economic improvement are no flash in the pan and that a global recovery could now be well under way.

The survey findings, compiled by research firm Markit Economics on behalf of Big 4 accounting firm KPMG International, show confidence in future business activity running at +42.9 in manufacturing and +46.5 in services. For the US and the BRIC economies (Brazil, Russia, India and China) those figures rise to +54 and +54.1 respectively in manufacturing and +65.6 and +51.9 respectively in services.

Similar numbers are posted for confidence around future new orders and business revenues. Despite all the cost pressures, even confidence around improved profits stands at +32.1 globally for manufacturing and +36.2 for services.

Prospects for increased employment in 12 months’ time are slightly less rosy - - at +7.8 for manufacturing and +16.9 for services - - suggesting that the recovery has some way still to run before all companies start thinking about full recruitment once more.

Commenting on the results, Alan Buckle, Global Head of Advisory at KPMG, said: “The latest Business Outlook numbers clearly demonstrate that almost all of us have turned the corner in terms of economic recovery. In nearly all sectors and geographies, business leaders are expecting improvements in their earnings and their business environment. A strong majority sees business being better in 12 months time than now; something which is consistent with GDP forecasts.”

“This represents a quite remarkable turnaround in business confidence; well above what we might have hoped for, especially in the U.S. Many people may find the extent of the optimism exhibited here somewhat surprising. However, it is also clear that problems still remain to be addressed in parts of Europe and in Japan.”

Across some of the key survey variables such as revenues, new orders, activity, profits and employment, the European countries within the survey underperform the global average by between eight and twenty points. Across both manufacturing and services sectors, Italy and the UK tend to be the best performers, with the latter almost certainly benefiting from currency issues over its Eurozone neighbours.

In both Europe and Japan, manufacturers expect to continue shedding jobs over the next 12 months.

Greece was the only country in which manufacturers expected activity to contract in the next 12 months.

The Japanese numbers are far less robust - - with half of their variables still in negative / pessimistic territory. Yet it could be argued that even this represents a minor triumph for a country still struggling with deflationary pressures.

KPMG says before the developed markets get too carried away with talk of their own revival, it is worth remembering that different economies have started this bounce back from very different points on the confidence scale. As the survey’s historic data shows, many Western companies which rather limped through the past few years were already some way behind their emerging market competitors whose spirits held up more robustly during the depths of the downturn - - and who now appear even more confident about the upturn.

According to Alan Buckle, this may well have major ramifications for the East versus West challenge which characterised the run-up to the credit crisis. He explained: “Before the recession, Western companies were facing an increasing competitive threat from the emerging economies. Two years later, their competitors already have their eyes firmly set on a growth agenda while Western businesses are only just beginning to recover. Therefore, the challenge of dealing with the competitive threat of the East has not gone away. In fact, it has been exacerbated.”

“The developing markets appear to hold the aces; robust local demand, strong business and government balance sheets and of course the cost advantages. So while in isolation, these results are comforting to businesses globally, it is clear that the threat to the West’s business supremacy has increased as a result of the last two traumatic years.”

The Business Outlook Survey is produced by Markit Economics on behalf of KPMG and is based on a survey of around 11,000 manufacturers and service providers that are asked to give their thoughts on future business conditions. The reports are produced on a tri-annual basis, with data collected in February, June and October. The current report is based on responses from around 6,200 companies

The countries covered by the survey are the US, Japan, Germany, the UK, France, Italy, Spain, Ireland, Austria*, the Netherlands*, Greece*, the Czech Republic*, Poland*, Brazil, Russia, India and China. (* manufacturing only)