Business sentiment among Asian firms rebounded in the third quarter as easing COVID-19 restrictions lifted sales, but lingering uncertainty over the pandemic thwarted a return to business as usual, a Thomson Reuters/INSEAD survey showed.
Asian firms’ outlook for the next six months tracked by the Thomson Reuters/INSEAD Asian Business Sentiment Index jumped to 53 in the third quarter from an 11-year low of 35 in the second, the survey of 103 companies across 11 Asia-Pacific countries showed.
It was also higher than 50 points, which indicates a positive outlook.
The survey comes as the easing of COVID-19 restrictions across Asia has reduced pressure on hard-hit economies, although the experience has varied across the region, with some countries still in recession and others, such as China, seeing a steady recovery.
More than two-thirds of the companies polled said that they saw the pandemic, or a fresh spike in COVID-19 cases, as a top risk.
About 14 percent said that a global recession was their biggest concern, while the rest flagged uncertainty over the upcoming US election in November and other risks.
“We’re recovering with a large dose of uncertainty,” said Antonio Fatas, an economics professor at global business school INSEAD in Singapore.
“If it was just because of Asia, I think the numbers would be more positive, but the reality is the world is not just Asia,” he said, pointing to greater uncertainty in Europe and the US.
The US has reported the greatest number of COVID-19 fatalities, while rising numbers in Europe are threatening to shut down parts of the continent again.
About 28 percent of companies in the third quarter were positive about their outlook, the survey showed, up sharply from 7.6 percent in the second quarter. About 60 percent of the firms polled said that they did not hire or lay off people this quarter, in contrast to the second quarter’s survey in which 63 percent said that they had cut jobs.
Companies polled included Australia-listed Oil Search Ltd, Indian motorcycle maker Hero MotoCorp and Japanese automaker Suzuki Motor Corp.
The survey was conducted between Aug. 31 and Monday last week.
While countries in Asia have had mixed success in containing the virus and its fallout on their economies, the Asian Development Bank expects output in the region to shrink for the first time in nearly six decades this year.
Some investors are shunning Asia’s riskier, high-yielding markets, despite the ample liquidity pumped into the financial system by central banks globally this year.
Satish Shankar, Asia-Pacific managing partner of business consultancy Bain & Co, said that many companies in the region would “need to fundamentally transform their business models” to survive.
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