Asia-Pacific business optimism up in Q2
The outlook generally brightened in emerging Asia-Pacific economies in the second quarter, but optimism in Thailand slipped back, according to Grant Thornton.
Business confidence across emerging Asia-Pacific rose for the third straight quarter, according to its quarterly global survey of 2,580 business leaders. China showed the biggest improvement. However, the recent volatility in Chinese shares indicates this optimism is prone to volatility.
Generally, business leaders across the region remain buoyant about growth prospects. Business optimism in emerging Asia-Pacific rose from 43 per cent in the first quarter to 52 per cent in the second, driven by a rise of 12 percentage points in China to 46 per cent. Elsewhere, India (85 per cent), the Philippines (78 per cent) and Indonesia (60 per cent) fell back slightly, although all remained in the global top 10.
In Thailand, business optimism declined from 36 per cent to 10 per cent because of immediate issues around the fishing and aviation industries, drought in the Central region and the slowing economies of major trading partners. Business leaders also cited a lack of growth initiatives as a major source of concern.
Andrew McBean, a partner at Grant Thornton in Thailand and a specialist in Asean markets, said yesterday that rising sentiment in China should be good for the rest of the region if the markets can find stability, especially if Chinese consumers start demanding more imports as the economy rebalances. China is also looking for places outside to invest its money and Thailand may benefit from this.
India has enacted some encouraging reforms but more needs to be done in terms of job creation if it is to benefit from its demographic dividend. Indonesia has also benefited from falling oil prices but much of its infrastructure remains deficient, hindering business growth.
"In Thailand we are struggling to find many reasons for optimism at the moment. The government’s focus is more towards stability over prosperity. However, it could be argued that this focus has at least arrested severe economic turbulence in recent years and they are trying to deal with significant systemic issues that had not been tackled for many years.
"The tumbling global commodity prices have hit the outlook for Malaysia, which is one of the world’s largest suppliers of liquefied natural gas," McBean said.
A shortage of skilled workers remains a headache across the region. About 36 per cent of business leaders cited the lack of talent as a constraint on their growth prospects, well above the global average of 29 per cent. Businesses in India (64 per cent) and the Philippines (44 per cent) were particularly concerned.
Demographics have a big part to play in the outlook for the region. China is facing an ageing population and a slowdown in the migration of workers to cities. India’s population is relatively young but businesses are complaining about a lack of skills.
"Thailand particularly is running at very close to zero unemployment and has a rapidly ageing population, so we need to get workers from abroad. However, our immigration policies are not aligned with this need. We can expect some real challenges in the medium term because of this," McBean said.
Global business optimism climbed 12 percentage points to net 45 per cent in the second quarter, with many of the world’s largest economies posting significant improvements.
Optimism in the United States, where businesses have been adding jobs rapidly, rose 11 points to 54 per cent, and in Japan from minus-17 per cent to 8 per cent. In Europe, business confidence rose for the fourth straight quarter to 58 per cent.
