BENGALURU, India- Business sentiment among Asian firms rebounded in the third quarter as easing coronavirus 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, RACSI jumped to 53 in the third quarter from an 11-year low of 35 in the second, according to the survey of 103 companies across 11 Asia-Pacific countries.
It was also higher than the 50-point mark, which indicates a positive outlook.
The survey comes as the easing of coronavirus restrictions across Asia has reduced pressure on hard-hit economies, though the experience has varied across the region, with some still in recession and others, like China, seeing a steady recovery.
More than two-thirds of the companies polled said they saw the pandemic, or a fresh spike in COVID-19 cases, as a top risk. About 14 percent said 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 United States.
The United States has reported the greatest number of COVID-19 fatalities, while rising numbers in Europe are now threatening to shut down parts of the continent again.
Some 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 they did not hire or lay off people this quarter, in contrast to the second quarter’s survey in which 63 percent said they had cut jobs.
Companies polled included Australia-listed Oil Search, Indian motorcycle maker Hero MotoCorp and Japanese car maker Suzuki Motor Corp.
The survey was conducted between Aug. 31 and Sept. 14.
While countries in Asia have had mixed success in containing the coronavirus 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.
China, where the coronavirus was first detected, has largely managed to contain its spread and South Korea and Japan have kept case numbers relatively low by global standards despite all three countries seeing a second wave of infections.
But elsewhere in the region the outbreak is worsening. India, for instance, has reported the second-highest number of cases globally.
Indeed, 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, the Asia-Pacific managing partner of business consultancy Bain & Company, said many companies in the region would “need to fundamentally transform their business models” to survive.
But he added that Asia’s economic rebound would be “strongly linked” to the recovery in the Chinese economy.