ASEAN KEY DESTINATIONS
YPO Global Pulse Survey: Economic confidence amongst Asian chief executives drops in third quarter
Business confidence in Asia declines as concerns grow amongst emerging economies
HONG KONG, Nov 1, 2016 - (ACN Newswire) - YPO, the premier chief executive leadership organization in the world, reported today that economic confidence amongst business leaders in Asia fell during the third quarter of the year. The YPO Global Pulse Confidence Index for Asia slipped 2.9 points, from 62.9 to 60.0 over the last three months.
Having reported the highest levels of confidence of any region in the world in the second quarter of the year, Asia fell behind the United States and the European Union in the third quarter but remained marginally ahead of the global average, which landed at 59.2.
The decline in sentiment was mainly felt within Asia's emerging economies. Confidence amongst YPO chief executives within the ASEAN countries slumped to its lowest level in the seven-year history of the study, with Indonesia, Malaysia, Singapore and Vietnam all experiencing marked declines in optimism.
Elsewhere, confidence remained steady in the region's largest economies. China reported a slight decline, slipping just 0.8 point to 61.4, its lowest level for a year but still in firmly optimistic territory. India dropped 2.0 points to 66.0 but maintained its position as the most confident country in the region and within the world's top ten economies. Japan saw confidence improve 1.1 point to 55.1, although at this level, it still remains below the regional score of 60.0.
"There are significant differences in economic outlook across Asia. Within the emerging economies, there are concerns about the increased valuation of the U.S. dollar and ongoing worries about the short-term economic performance of China and India. On the other hand, the outlook amongst business leaders within these leading economies remains strong, which has to be viewed as an encouraging sign," said Azran Osman-Rani, CEO of iflix Malaysia and chair of the YPO Malaysia Chapter. As business leaders in Asia finalise their plans for 2017, they will be monitoring key economic indicators closely."
Globally, the YPO Global Pulse Index for the third quarter of 2016 fell by half a point to 59.2. The highest levels of confidence were reported in the European Union, which climbed 2.2 points to 60.7. Close behind was the United States, where confidence remained stable in the third quarter, edging down 0.4 point from 60.8 to 60.4. This meant that the world's three largest economic regions reported confidence levels within one point of each other. Elsewhere, confidence in Latin America increased by 1.5 points to 55.9, whilst the Middle East and North Africa fell 2.0 points to 53.9, making it the most pessimistic region in the world. Confidence in Africa rose 1.7 points to land at 55.5, its highest level since July 2015.
Key findings in Asia
Lower forecasts for sales, hiring and investment
Concerns over economic conditions had an impact on chief executives' predictions for their own organisations over the next 12 months. The three key indices in the survey, sales, employment and fixed investment, all fell in the third quarter.
Most notably, the YPO Employment Index for Asia fell 2.7 points to 55.5, its lowest level for four years, suggesting that unemployment will continue to be a challenge for many economies in the region.
Less than a third (30%) of chief executives expected to increase headcount in the next year. This was significantly down on the previous quarter, when 38% forecasted increased employment. In the latest survey, 10% predicted a reduction in staff numbers, compared with 7% in the previous study.
Similarly, when looking ahead 12 months in regards to sales, 66% of business leaders expected to increase revenue, down from 72% in the second quarter.
Confidence crashes within ASEAN economies. The YPO Global Pulse Index for ASEAN countries - Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Myanmar (Burma), Cambodia, Laos, Vietnam - tumbled by a significant 7.9 points to 52.6, its lowest level in the seven-year history of the study. At this level, it is more than 7 points behind the overall score for Asia.
Indian business leaders maintain an optimistic outlook. For the third quarter, the YPO Global Pulse Index for India fell 2.0 points, from 68.0 to 66.0, which is still within firmly optimistic territory. The modest decline comes follows opposition to the government's reform agenda, but business leaders in India remain extremely positive about the economic climate and the growth prospects for their own organisations.
Increase in confidence in Australasia. The YPO Global Pulse Index for Australasia jumped 2.3 points, from 58.3 to 60.6, in the third quarter, its highest level since July 2015.
When thinking about the prospects for their own organisations, business leaders in the region reported more subdued projections for sales than in the previous quarter, but they predicted increased levels of fixed investment and employment.
More than half (57%) of chief executives expected to increase revenues over the next 12 months, down from 61% in the previous quarter. Forty-three percent expected to increase headcount in the next year, up from 35% previously, and 53% forecasted greater levels of fixed investment, compared with only 36% three months ago.
Heading into 2017, the outlook is likely to stay the same as nearly half (49%) of chief executives forecasted there would be little or no change in the business and economic conditions affecting their organisations over the next six months. More than a quarter (28%) expected conditions to improve, and 24% expected the economic landscape to deteriorate.
YPO Global Pulse Confidence Index
The quarterly electronic survey, conducted in the first two weeks of October 2016, gathered answers from 1,625 YPO chief executive officers across the globe, including 180 in Asia and 69 in Australasia. Visitwww.ypo.org/globalpulse for more information about the survey methodology and results from around the world.
YPO is a global community of chief executives dedicated to becoming Better Leaders through Lifelong Learning and Idea Exchange(TM). We create trusted spaces where leaders gather, connect, share and grow. The YPO platform provides more than 24,000 members in more than 130 countries - representing diversified industries and types of businesses - with access to extraordinary educational opportunities, alliances with leading institutions, and interest-based communities to support their businesses, communities and families. For more information, visitwww.ypo.org.
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