There is an increase in export expectations across the Asia Pacific region, driven largely by China and Japan, reveal new figures from Grant Thornton’s quarterly International Business Report.
This comes despite the US withdrawing from the Trans Pacific Partnership. According to the findings, business optimism across APAC also remains robust.
Grant Thornton’s most recent survey of 2,500 businesses in 36 economies reveal that export expectations in the region reached +18% in Q2 2017, the highest figure in over two years.
In China, export expectations have increased from 10% a year ago to 20% now, the highest figure since Q3 2014. In Japan, export plans had nosedived towards the end of last year but the figure has now risen back up to 12%, the same level as a year ago.
Elsewhere in Asia Pacific, export expectations have also recorded notable increases. In New Zealand, levels have risen from 24% to 46%, almost back to the 48% high in Q3 2016. The figures follow a global trend for increasing export expectations, which also rose to a two year high of 19%.
Business optimism holding steady
Business leaders across APAC also remain confident in their outlook for the economy, with business optimism holding steady at +38% across the region - just a 1pp drop from the previous quarter.
“It’s good news for the global economy and neighboring countries when China’s export expectations increase,” says Xu Hua, CEO of Grant Thornton China. “As the second biggest economy in the world, an increase in exports is likely to have a positive knock on effect.”
China’s increase comes off the back of an aggressive fiscal stimulus package by its government, worth around 2% of total GDP. The region’s increased export expectations may also be a response to renewed hope for the Trans Pacific Partnership.
When the US pulled out of the TPP, there were fears that this might spell the end for the initiative. However, with other leaders committing to try and salvage the deal, businesses might be feeling more confident about the future.
“The economic power of TPP will not be the same without the US, so it remains to be seen what the full impact will be,” adds Xu.
The maintenance of the level of business optimism across APAC was largely driven by China, where optimism held steady at 48%, a near three-year high; and New Zealand, where optimism increased from 76% to 80%, the joint highest level in two years.
This reflects a global trend where business optimism hit an all-time quarterly high of 51% in the second quarter of this year. This represents five consecutive quarters of increases in global business optimism.
Healthy confidence was also evident in the US, where optimism has hit an all-time high of 81%.