Business Optimism

Business optimism across Asia Pacific region up

NEW research from Grant Thornton’s International Business Report (IBR), a quarterly global survey of business leaders in 36 economies, reveals that business across the Asia Pacific region are resolute in their optimism for the coming 12 months. With expectations for exports and revenue steadying, business fears over the speed and size of the Chinese economy slowdown appear to have eased. Globally, business optimism is also holding firm with European firms particularly resilient.

Business optimism across the Asia Pacific region has increased from 20% to 31% in Q4, and is higher than the 27% recorded this time last year. In China, business optimism increased from 26% to 36% in Q4, and economies like Indonesia (36% to 56%) have followed suit. Even Malaysia (-28% to -14%) and Thailand (-8% to 4%), which have taken bigger hits to confidence as fears over the impact of China’s slowdown grew, have seen their confidence levels improve slightly.

Yet the research also sees a warning light flashing in the US, where firms report a dent to their confidence heading into the New Year amid concerns over export markets and the strength of the Dollar. Businesses in the US have reported a drop in optimism from 74% to 50% in Q4, the biggest fall of any of the 36 countries surveyed.

Marivic Españo, Chairperson and Chief Executive Officer at P&A Grant Thornton, said: “Fears over the slowdown of the Chinese economy caused a shock to the system in 2015, and in Q3 the optimism of Asia Pacific businesses plummeted. The good news is that it has improved since then. This is partly because the rebalancing of the Chinese economy creates new opportunities; demand for raw materials will not reach the heights we saw in recent years but as the need for services will continue to grow”.

“At the same time, increasing numbers of firms across Asia Pacific are looking further afield in 2016 and exploring growth opportunities around the world. This is reflected in their improved levels of optimism,” Españo continues.

Grant Thornton’s research finds that despite revenue expectations in China falling from 33% to 21% this quarter, across Asia Pacific they have only shifted from 38% to 36%. Similarly, Chinese export expectations have slipped from 14% to just 6% but across the region they have held at 11%, down from 12%.

Globally, business optimism heading into 2016 stands at net 36% – only slightly down from Q3 2015 and just above the 35% recorded a year ago. Net 38% of EU businesses are optimistic about their economy over the next 12 months, the same as in Q3. Businesses in Latin America report big quarterly increases in optimism.

 “The global economy continues to change and evolve, with shifting landscapes in major economies creating new challenges but also new opportunities. Those businesses with an instinct for growth will be best placed to spot these emerging pockets of opportunity, build new trade links, and make the most of the brighter outlook being reported for 2016,” Españo added.

As published in Mindanao Times dated 05 January 2016.