According to quarterly survey of 240,000 chief executive officers based in 130 countries, Asian business leaders still expected to increase revenues, hiring and fixed investment, even though for the first time since October 2015, they were less confident about the economic outlook than their global peers.
Climbing 1.2 points to 61.2 in the fourth quarter of 2016 on the back of moderate GDP growth in most of the region’s major economies, chief executives in Asia reported a modest increase in economic confidence, according to YPO’s quarterly Global Pulse Confidence Index released on Tuesday. According to YPO, in the third quarter of the year, the global reading of 62.2 — which saw a “significant increase” of 3 points from 59.2, and the Asian index was way behind the global index.
Countries in the Middle East and North Africa, the countries in the Association of Southeast Asian Nations and the United States were the major drivers for the improvement in global sentiment in the last quarter of 2016, the report points out. As commodity and oil prices staged a rebound, said the leadership organization in its press release, confidence surged 9.4 points to 62.0 in the developing ASEAN economies.
“It’s encouraging to see that the outlook is still firmly optimistic in each of the major markets and that confidence has quickly returned to most of the developing economies in the region. Clearly there will be some concerns about the potential impact of a more protectionist U.S. economic policy on global trade and a strong U.S. dollar, and chief executives in Asia will be monitoring the situation carefully over the coming months,” said Patrick Siewert, YPO’s Regional Chair of North Asia and managing director of The Carlyle Group.
There was an over al increase in the key indicators of sales, hiring and fixed investment, in the final quarter of 2016 even though sentiment was less upbeat in Asia than in the U.S.
While just 7 percent of the chief executives expected a decline in revenues, at least two thirds of chief executives expected to increase sales in the next year. While only 10 percent of the respondents predicted a reduction in staff numbers, a majority – more than a third, of them expected to increase headcount in the coming 12 months. On the other hand, while only five percent predicting reduced investment, more than half expected to increase fixed investment in the coming year.
Noting the largest single quarter gain in five years from 60.4 in the third quarter, the highest ranking among the regions surveyed, in the U.S., economic confidence reached 64.6 in the fourth quarter of 2016.
Confidence surged 5.6 points to 59.5 in the Middle East and North Africa. “This jump in confidence follows OPEC’s decision in November to cut oil production, which caused oil prices to increase by $10 per barrel,” said YPO.
On the other hand, reflecting a steady economic outlook, economic confidence in the European Union edged upwards to 60.9 in the quarter.
But slipping by 0.8 point to 54.7, Africa was the only region to report a decline in confidence.
(Adapted from CNBC)
Categories: Economy & Finance