Asian business sentiment at seven-year high: Survey

Accelerating global growth gives boost to many countries

SYDNEY • Business confidence among Asian firms rose in the first quarter to the highest level in seven years, a Thomson Reuters/Insead survey showed, as a fresh surge by the Chinese economy offset concerns about rising trade barriers.

The Thomson Reuters/Insead Asian Business Sentiment Index, representing the six-month outlook of 67 firms, advanced a notch to 79 for the January-March quarter, compared with three months before. A reading above 50 indicates a positive outlook.

"The improvement is not dramatic, but with a historical perspective, this is a good reading," said economics professor Antonio Fatas of global business school Insead.

Thailand, the Philippines and Malaysia saw robust jumps in sentiment, showing that many countries in Asia continue to benefit from accelerating global growth. In particular, China has seen exports soar, up 45 per cent last month to mark their fastest growth in three years.

"China has escaped the fear of a crisis... and that's why you see strong confidence. Imbalances persist but there is no real threat of a crisis over the short term," said Dr Fatas.

The sub-index for Thailand surged to 100 from 85. The Philippines saw a climb to 83 from 70, while sentiment in Malaysia improved five notches to 75.

"The tourism and export sector expansion will help drive growth (in Thailand) this year," said Mr Rattham Somboonchareon, a planning manager at survey respondent Thai Airways, adding that government spending was also a key driver of growth.

Australia's sub-index dropped to 80 from 92, although the figure is relatively high when compared with its historical average of 69.

The International Monetary Fund and World Bank have raised their global growth forecasts for this year due to strong trade, consumer spending and investment in many major economies. But intensifying rhetoric in favour of protectionism has become a major concern.

United States President Donald Trump has announced import tariffs on steel and aluminium, and is expected to consider additional tariffs targeted at China. He has also repeatedly said the US free-trade deal with South Korea is "unfair" and has threatened to scrap it altogether.

That has battered sentiment in South Korea, with the country's sub-index plunging to 50 from 83.

"There is a sense among Korean businesses that Trump will continue to be aggressive against their country," said Dr Fatas.

Singapore's sub-index declined to 75 from 79. Its exports took a surprise dip last month as tech product shipments continued to retreat from the hot pace of recent months.

Japan, where consumer spending numbers have been subdued, recorded its lowest reading in a year, at 67 compared with the fourth quarter's 70. India also experienced a decline in sentiment, to 72 from 79.

The index for sentiment in China rose to 88 from 83, but the number of respondents was low (four firms).

Increasing trade friction and higher interest rates were cited as the biggest concerns in the survey.

The technology, construction, energy and metals sectors expressed concern about trade friction.

Sectors that identified rising interest rates as a risk included energy, real estate, retail and technology. The energy sector also showed concern about the potential for a sudden asset price correction.

The auto sector matched its highest sub-index reading posted seven years ago, while the retail and leisure sector recorded its best reading. Healthcare also had its highest score in two years.


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A version of this article appeared in the print edition of The Straits Times on March 22, 2018, with the headline Asian business sentiment at seven-year high: Survey. Subscribe