NEW DELHI: Business sentiment among Asia’s top companies rebounded in the fourth quarter to the second-highest level in almost three years, a survey showed, helped by a stronger United States economy and a plunge in oil prices.
The Thomson Reuters/INSEAD Asian Business Sentiment Index increased to 72 in the fourth quarter from 66 in the previous three months. The result was only slightly below the 74 reading of the second quarter, which was the highest since early 2012.
Indian businesses provided the biggest boost to the index, with companies reporting a maximum score of 100 for the third consecutive quarter as they look to new Prime Minister Narendra Modi to speed up economic recovery.
Corporations in China, where worries about a slowdown in economic growth persist, were among the least positive with a reading of 50, coming in below Japan, which is stuck in recession, at 56.
US unemployment fell to a six-year low in November, a signal that the world’s biggest economy and a key export destination for Asian companies is healthier and its consumers are growing in confidence.
“The US’s economic leadership is influencing expectations across the world, and the US is really becoming stronger,” said Antonio Fatas, a Singapore-based economics professor at INSEAD.
“Asia is a region where there is not massive uncertainty related to political risk. This is a region that grows with the world.”
The rosier picture in the US coincided with oil prices falling to five-year lows, boosting Asian economies dependent on imports of crude.
Fatas cautioned that uncertainty remained, not least in China, where investors and companies are “sitting and waiting for data” to indicate how dramatically growth in Asia’s largest economy is slowing.
Global economic uncertainty remained the biggest concern for Asian businesses during the quarter, the survey showed, as well as rising costs and other risks, such as regulatory change.
“I am surprised that the US and oil prices seem to have outweighed concerns about China and Europe. The downside risks to China’s growth are significant, especially related to real estate and shadow banking,” said Dariusz Kowalczyk, a senior economist at Credit Agricole.
Of the 116 companies that responded, 51 per cent gave a positive outlook, while 42 per cent reported a neutral outlook and seven per cent were negative. Reuters