Asia sees fall in business sentiment

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Business sentiment among Asia’s top companies dropped sharply in the fourth quarter, extending last quarter’s declines, with global economic uncertainty and rising costs weighing on the region’s firms, a survey showed.

The Thomson Reuters/INSEAD Asia Business Sentiment Index fell to 62 in the fourth quarter from 66 in the third quarter of 2013, the lowest reading since the third quarter of 2012. A reading above 50 indicates an overall positive outlook.

Sentiment in Southeast Asia’s $1.5 trillion economy was undermined by political turbulence in Thailand and a typhoon in the Philippines, causing dismal readings of 40 and 58 respectively, which were the lowest for both countries since the poll was first compiled in 2009.

Although China and India’s bullish scores of 75 and 82 respectively supported the index, export-driven north Asian economies such as South Korea as well as regional trading hub Singapore also showed weaker readings, underscoring still-anaemic global business conditions.

“The global economic recovery is still very fragile,” Zhang Shiyuan, an economist at Shanghai-based Southwest Securities Co said. “There is a fundamental problem that there’s still too much debt. It’s a timebomb that may be detonated if monetary and fiscal policies don’t coordinate well.”

The survey showed that the auto sector was the most negative with a reading of 33, a sharp drop from 63 in the previous quarter, followed by the food and resources sectors with fourth-quarter scores of 50.