Asia Pacific – The ways in which governments are responding to political and economic risks have an impact on businesses within the Asia Pacific region, according to The Economist Corporate Network’s (ECN) 2017 Asia Business Outlook Survey, “Navigating Asia’s risks and rewards”.
Around 50-60% of those surveyed indicated that countries such as Indonesia, Myanmar, Vietnam and India are responding to risks in ways that will result in at least slight or significant improvements for their business in 2017.
Almost one-third of respondents hold a pessimistic view on how China is dealing with risks. Looking out over the three years to 2019, however, China’s expected handling of risks also earns a positive assessment by about one-half of the respondents.
India and China are positioned to remain the world’s fastest-growing major economies as private consumption and investment are expected to fuel demand for goods and services. Around three-quarters of survey participants believe that revenues in China will increase.
Despite the risks companies may face in 2017, China remains the top destination for attracting investors with 71.6% of respondents foreseeing increases in investment, while only 1.8% of firms plan to reduce investment.
“Economies in Asia and around the world are entering a year associated with a depth and range of risks unprecedented in recent memory,” said Rob Koepp, Director of The Economist Corporate Network.
“On the political front, nationalism and anti-globalism are gaining momentum while on the economic front, commodities, currencies and emerging markets are facing enormous strains. The US presidential election of Donald Trump, who frequently articulates populist grievances against China, and the sinking value of China’s renminbi currency, illustrates how the twin pillars of political and economic risks are posing heightened challenges for economies in Asia,” he added.
Although respondents varied in their assessments of how well Asian governments are addressing such risks, the survey findings show that optimism about Asia remains strong.
South-east Asia received the greatest percentage of executives, just over 80%, looking forward to revenue growth in 2017. India and China also were cited by a large majority who anticipate sales to increase throughout the new year.
Yet other parts of the survey’s findings are more cautionary, such as the one-fifth of executives surveyed who complained that their firms’ expectations for growth in China were overly aggressive; the exact same proportion claimed that their firms’ expectations for growth in India are too low.
“To maximise revenue opportunities in Asia, while also countering business threats, companies should develop strategies that are rooted in realities on the ground,” said Mr Koepp, “A core objective of our annual Asia Business Outlook Survey is to provide firms with such a tool—an up-to-date, insightful and practical assessment on how business leaders active in Asia view the prospects and the issues that they face. Corporate leadership around the world can gain from the first-hand knowledge that our survey participants share.”
The annual Asia Business Outlook Survey gathers confidential feedback from business leaders throughout Asia at the end of the previous year. Based on 2016’s increase in risks stemming from factors such as political populism, trade protectionism and various forms of market volatility, ECN added risk assessment components to this latest survey.
Despite these increased risks, the overall sentiment is that Asia is not being too negatively affected. Whereas at the end of 2015, only 37% of respondents stated that their firms’ expectations for revenue growth in the coming year had improved, the figure had risen to 53% at the end of 2016, providing the 2017 edition of the Asia Business Outlook Survey one of the most improved basic outlooks in five years.
The full report could be accessed on ECN website.
The Economist Corporate Network
The Economist Corporate Network (ECN) is The Economist Group’s advisory service for senior executives seeking insight into economic and business trends across markets and regions.
Asia Business Outlook Survey (ABOS)
The ECN surveyed over 200 Asia-based business executives in November 2016 about how their businesses are performing in Asia and their expectations for the year ahead. The companies came from a wide range of sectors and maintained operations throughout Asia.