Business confidence on the rise in Asia, pandemic remains top risk
Asian companies were most optimistic in the fourth quarter of this year, as business activity in the region increased and COVID-19 vaccines began to spread in Western countries ahead of their launch in Asia, according to Thomson Reuters / INSEAD..
The six-month outlook for the index for Asian companies, which tracks the Thomson Reuters / INSEAD Asian Business Sentiment Index, jumped to 62 this quarter from 53 recorded. in third.
The latter level, according to a survey of 101 companies in 11 countries in the Asia-Pacific region, was the highest since the fourth quarter of 2019. A reading above 50 indicates a positive outlook.
«There is a sense of optimism in the future, said Antonio Fatas (Antonio Fatas) Singaporean Professor of Economics at INSEAD Global Business School.
«The situation is improving, but some uncertainty remains. The impact of the crisis varies greatly across sectors», – he added, noting the weakness of the transport sector due to travel restrictions around the world.
More than half of the respondents surveyed noted an increased incidence of infection with the new coronavirus, as well as a possible shortage of vaccines in some parts of the world, at least at the initial stage, as the biggest risk.
Although the US and UK have already begun vaccinating their populations, only a few Asian countries expect to receive significant numbers of coronavirus vaccine doses in the coming weeks..
Some Asian countries are still conducting their own late stages of vaccine trials, while others are biding their time to check for any side effects in people vaccinated in other parts of the world..
A quarter of companies surveyed December 4-18 are most concerned about job cuts in businesses, which will undoubtedly hurt consumption..
The coronavirus pandemic has caused the worst global economic downturn since the Great Depression, when millions of jobs were lost and industry was brought to its knees.
However, Asia, which has done better in the fight against coronavirus than Europe and the US, has high hopes for an economic recovery..
«After a year of economic downturn, 2021 will be “the year of the phoenix” with strong recovery in global gross domestic product and corporate income in 2021 thanks to vaccine rollouts and significant political support», – stated Cesar Perez Ruiz (Cesar Perez Ruiz), Chief Investment Officer, Pictet Wealth Management.
The recovery of China, the world’s second-largest economy, to pre-pandemic levels has raised hopes for an early recovery. Equity markets in China, South Korea and Taiwan are up at least 20% this year, leading growth in the region.
According to a Thomson Reuters INSEAD poll, about 44% of companies surveyed in the fourth quarter were positive about their forecasts for the next six months, a sharp increase from 28% in the third quarter and only 8% in the second..
About 58% of companies said they did not hire or fire people in the quarter, with only a fifth of them reporting that staffing levels were below normal. This is similar to the numbers in the third quarter. In the second quarter, 62% of companies announced job cuts.
«While I still see some uncertainty, the numbers are good, ”Fatas said. – It’s like a recovery that is gaining momentum, and in which more and more companies feel confident».
Companies interviewed included Indian Housing Development Finance Corp Ltd, Japanese car manufacturer Suzuki Motor Corp and Thai electronics company Delta Electronics (Thailand) PCL.