Asia-Pacific business leaders are at their most confident in nearly two years, with optimism rising to 39 percent from 30 percent in the last three months alone.
According to the Grant Thornton International Business Report, brighter prospects for 2017 have replaced the tough times of recent years, during which optimism sank to a four-year low of 20 percent in the third quarter of 2015.
Globally, the research finds that business optimism is at its highest level on record at 49 percent.
The findings, from Grant Thornton’s most recent quarterly global survey of 2,400 businesses in 36 economies, reveal that both the emerging and developed Asia-Pacific economies are feeling more positive about the future.
In the first quarter of 2017, business optimism rose among emerging economies by 4 points to 57 percent and among developed economies by 16 points to zero.
Although optimism in developed Asia-Pacific economies has entered neutral territory for the first time in over a year, the findings show business fundamentals are moving in the opposite direction. Expectations for revenue and profitability have dropped to 30 percent from 40 percent, and to 15 percent from 23 percent, respectively.
Meanwhile, the number of firms expecting to invest in plant and machinery fell 10 points to 13 percent.
By comparison, the emerging Asia-Pacific economies are expecting both revenue and profitability to rise, to 55 percent from 51 percent, and to 42 percent from 39 percent, respectively. They also anticipate more investment in plant and machinery, up 5 points to 28 percent.
Marivic Espano, chairwoman of P&A Grant Thornton, said, “We’ve witnessed a split between the developed and emerging Asia-Pacific regions for some time now, so it’s encouraging to see the region’s developed economies experience a positive swing in the pendulum. With confirmation of a US withdrawal from the Trans-Pacific Partnership, at least businesses can now begin to manage the fall-out. Many will be looking to see how trade relations with the US pan out in future and, in the meantime, the corridor to China for exports looks positive as its economy continues to recover.”
The research shows that business leaders in China are reporting their highest levels of optimism since the third quarter of 2015 – up 2 points to 48 percent – supported by expected improvements in profitability from 29 percent to 38 percent and revenue from 44 percent to 50 percent.
The Philippines reported an optimism rate of 98 percent (from 80 percent, fourth quarter of 2016 ) and increase in employment of 54 percent (from 52). Australia is also experiencing greater business confidence, up 6 points to 69 percent, alongside upticks in revenue (up 20 points to 71 percent) and profitability (up 13 points to 57 percent).
However, revenue expectations have fallen in Japan to 18 percent (down 20 points) and in Singapore to -2 percent (down 22 points), along with profitability, which now sits at 2 percent in Japan (down 14 points) and -12 percent in Singapore (down 6 points).
“It’s really interesting to look at some of the relationships within this region. China has sprung back to life, pushing up commodity prices and energizing parts of Australia’s economy – particularly iron ore. But these trends are prone to reversal and Australia won’t be able to bank on a price surge in the longer term to power the economy.
Elsewhere, business growth in Indonesia, Malaysia and Thailand continues to hold steady,” Espano added.