Companies in India and the Philippines are the most optimistic in the Asia-Pacific region, according to the ThomsonReuters/INSEAD Asia Business Sentiment Index, which surveyed 200 of the region’s top companies.
The index showed that business sentiment among Asia's top companies reached its highest level in more than two years in the second quarter of 2014, rising sharply on supportive political changes around the region and positive signs from China.
The index jumped to 74 in the second quarter from 64 in the first, the highest reading since the start of 2012. A reading above 50 indicates an overall positive outlook.
Despite worries over the global economy, rising costs and volatility in exchange rates, all 10 respondents from India reported a positive outlook, a level last seen in Q4 2012.
A majority (9) of the companies said new orders and sales increased in the second quarter while employment levels rose for 60 percent of the respondents. Three companies said delays in payments from customers had declined.
A resounding election victory last month for pro-business leader Narendra Modi, with the mandate to steer the economy out of its current slump and create more jobs, has revived consumer confidence in Asia’s thirdlargest economy.
"India is positive because the previous government has done such a poor job that everyone expects it can only improve," Dariusz Kowalczyk, Hong Kong-based senior economist for Asia ex-Japan at Credit Agricole, told Reuters.
Meanwhile, all of the Philippines' 15 respondents showed a positive outlook which remained unchanged at 100. Two-thirds of the respondents reported higher employment levels while almost all saw an increase in new orders and sales.
Positive outlook among Southeast Asian businesses
The Philippines led Southeast Asian sentiment where businesses are mostly upbeat as Thailand recovered and with the exception of Malaysia, which slipped to 67 from 75 as rising costs and uncertain world economics continued to worry businesses in the region.
Singapore's sentiment index remained unchanged at 67 with two of six respondents showing a positive outlook and the rest remaining neutral.
Only three of six companies in the island nation said new orders and sales increased this quarter compared with eight of nine respondents last quarter.
Corporate sentiment in Malaysia fell to 67 from 75 the quarter before while the Philippines held steady at the maximum score of 100.
China, Asia's largest economy, posted a score of 67, bouncing back from a score of 50 in the quarter before as Beijing's "mini-stimulus" package promised to help the country shift smoothly into slower gear and hit its growth targets for the year.