Business optimism at Asian companies hits a four-year low

Author: PM Editorial | Date: 06 Oct 2015

Negative outlook will encourage businesses to reskill staff, say experts

The level of optimism among leading Asian companies has dwindled to its lowest point for four years, and in Singapore has reached an all-time low, according to new figures from Thomson Reuters.
 
Fears over China’s economic health are the main driver for the negative sentiment – which could lead to restructuring and reskilling exercises at larger companies, according to commentators.
 
Overall, the Thomson Reuters/INSEAD Asian Business Sentiment Index dropped to 60 in the quarter to September 2015, down from 71 in June and 66 a year earlier. The index asks 79 firms throughout the region to examine the business outlook for the next six months.
 
Singapore was Asia Pacific's most pessimistic economy in the third quarter, as a record five of seven respondents reported a negative six-month outlook. Neighbouring Indonesia was only marginally less downbeat, and many respondents cited economic slowdown in China as their biggest risk.
 
“The current perceived slowdown in the region is a result of the macroeconomic headwinds facing companies in Asia, especially those in countries highly dependent on commodities and energy exports,” says Shai Ganu, Mercer’s ASEAN Talent Consulting leader.
 
In Malaysia, the main concern was falling emerging market currencies, such as the ringgit, which has dropped 14 per cent in three months. Indonesia was equally concerned, with the rupiah falling 8.6 per cent against the US dollar over the past three months. The Philippines and Thailand were the most optimistic countries. But Ganu says that despite the fact businesses may be rethinking their growth projections and generally scaling back, they are continuing to consider their long-term ambitions.
 
“Asian companies are using this perceived slowdown to pursue aggressive growth strategies, such as looking out for potential acquisitions and alliances, restructuring and streamlining operations, and investing in reskilling their employees to prepare for the near future,” he says.