Chief executives in the Asia-Pacific region are jittery over financial market volatility and just 28 per cent of business leaders are “very confident” their organisations will see revenue growth over the next 12 months, down from 46 per cent a year ago, according to PwC’s fifth annual Apec CEO Survey.
The picture in the survey varies around the region. In the Philippines, 51 per cent of business leaders are very confident of business growth in the next year, compared with 34 per cent in the United States and 20 per cent in China.
For the PwC survey entitled CEO Confidence in Asia Pacific Shaken but Strong 800 business leaders were surveyed about the prospects for business, growth and free trade in the region.
Chief executives are also worried about cyber security, exposure to natural disaster risks and regional geopolitical tensions as threats to business investment and growth.
Though they are feeling less confident, most (53 per cent) plan to increase investment in the next 12 months, with most of that investment (68 per cent) heading to the Apec region.
China, the US and Indonesia remain the main draws for business investments, but the Philippines, Vietnam and Singapore economies are also proving attractive, and around half of chief executives say they plan to raise investments during the next year.
PwC Ireland partner Andrew O'Callaghan said although chief executives were very sensitive to financial market signals and the likely impact on revenue growth, they were still expanding into new Apec locations.
“This gives testament to the experience they have gained in managing short-term instability and balancing this against the opportunities to generate business in the region,” said O’Callaghan.
He said Asia-Pac remained a strong growth export market for Ireland in trading in products and services.
"Equally, with its competitive tax regime and highly talented people, Ireland offers great opportunities for inward investment as a gateway into Europe and the US for Asia-Pac companies looking to grow and expand internationally," he said.
Certainly the downbeat forecasts are piling up.
The Conference Board, whose prognosis we reported in Asia Briefing last week, has updated its gross domestic product forecasts for China to reflect data gathered by professor Harry Wu of Hitotsubashi University going back to 1952. "After years of over-optimistic GDP estimates from Beijing, the Conference Board has adopted new adjustments to Chinese data, which estimate Chinese economic growth at a more realistic 3.7 per cent," the think tank said.
“Though the same growth rate is expected for 2016, China is one of the major wild cards in this year’s Global Outlook. In the wake of the equity bubble popping this summer, a further slowdown is quite possible, especially if rash interventions contribute to further misallocation of capital. Beyond the short-term volatility, however, it’s likely that the bulk of China’s slowdown has already taken place since 2011, even if unapparent in official statistics. Growth could pick up in the medium term to average 4.5 per cent in 2016–20, before dropping to 3.6 per cent in 2021–25,” the Conference Board said.
