Business confidence in Asia Pacific picked up sharply in Q2 though businesses in the region still remain nervous about future prospects. Dip in confidence across the OECD linked to Brexit uncertainty, which is set to continue as the UK commences a complex multi-year process to extricate itself from the EU.
OECD woes partially offset by improvements elsewhere with China looking less likely to suffer a large currency devaluation, and the US enjoying healthy consumer confidence and unemployment figures.
The latest Global Economic Conditions Survey (GECS) released by ACCA (the Association of Chartered Certified Accountants) and IMA (the Institute of Management Accountants), offers an early indication of how uncertainty will effect OECD economies, with business confidence subdued despite an improving global outlook.
Responding to the findings, Reuter Chua, head of ACCA Singapore said: “Business confidence has picked up encouragingly in Singapore over the last three months. This has been led by much stronger sentiment in China, where the sense of crisis that dominated the second half of 2015 has now faded.”
Singapore not out of the woods
Although the survey findings show things are improving slightly, Chua has warned that Singapore is not out of the woods yet.
“Now is not the time for complacency. Although we are seeing a pickup in confidence, businesses in Singapore are undoubtedly still nervous about the future. Almost half (47%) of those we asked reported cuts in capital expenditure and declining orders (42%) while most worryingly of all, 60% told us they were in the midst of a hiring freeze,” says Chua.
According to Chua, the situation is unsurprising given the current volatility across the global markets.
“Global trade is hugely important to Singapore, and across the whole of the Asia Pacific region. Along with Hong Kong and Malaysia, we are among the most open economies in the world. It is no surprise therefore that the current events worldwide will impact on the confidence of businesses here.”
In fact, Chua anticipates the potential impact of global events such as Britain’s decision to leave the European Union will be felt globally for the foreseeable future.
“It would not be a surprise if business sentiment falls in Q3. The potential for long-term uncertainty as the UK negotiates its complex departure from the European Union could weigh down on global confidence for some time to come. It is important that the UK Government acts fast to come up with a plan for its trade links across the world.”