Business confidence among Asian companies 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 one notch to 79 for the January-to-March quarter compared with three months earlier.
A reading above 50 indicates a positive outlook.
“The improvement is not dramatic, but with a historical perspective this is a good reading,” said Antonio Fatas, a Singapore-based economics professor at global business school INSEAD.
Thailand, the Philippines and Malaysia saw sharp increases in sentiment, showing that many countries in Asia continue to benefit from accelerating global growth.
In particular, China has seen exports soar, up 45 percent last month to mark their fastest growth in three years.
“China ... has escaped the fear of a crisis that started back in 2016 and that’s why you see strong confidence. Imbalances persist, but there is no real threat of a crisis over the short term,” Fatas said.
The subindex for Thailand surged to 100 from 85 and 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 Rattham Somboonchareon, a planning manager at survey respondent Thai Airways, adding that government spending was a key growth driver.
Australia’s subindex dropped to 80 from 92, although the figure is relatively high when compared with its historical average of 69.
While the IMF and the World Bank have raised their global growth forecasts for this year due to strong trade, consumer spending and investment in many major economies, intensifying rhetoric in favor of protectionism has become a major concern.
US President Donald Trump has announced import tariffs on steel and aluminum, and is expected to consider additional tariffs targeted specifically at China.
He has also repeatedly said the US free-trade deal with South Korea is “unfair” and has threatened to scrap it altogether on multiple occasions.
That has battered sentiment in South Korea, with its subindex plunging to 50 from 83.
“There is a sense among [South] Korean businesses that Trump will continue to be aggressive against their country,” Fatas said.
Singapore’s subindex declined to 75 from 79. The nation’s 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, falling to 72 from 79.
China’s subindex increased to 88 from 83, but the number of respondents was low at four companies.
Increasing trade friction and higher interest rates were cited as the biggest concerns in the survey.
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