Asian business confidence sinks on Covid-19 impact

Pandemic sending countries into lockdown, battering economic activity and consumer sentiment: Survey

SINGAPORE: Confidence among Asian companies slumped to near 11-year lows in the first quarter as the coronavirus pandemic sent countries into lockdown, battering economic activity and consumer sentiment, a Thomson Reuters/INSEAD survey showed.

Representing the six-month outlook of 100 companies, the Thomson Reuters/INSEAD Asian Business Sentiment Index fell 18 points to 53 for the first quarter.

While anything above 50 indicates a positive outlook, the latest reading was the same as the second quarter of last year, which in turn was the lowest since the second quarter of 2009, when the first edition of the survey was released.

Also, the survey, conducted in 11 AsiaPacific countries across a range of sectors from Feb 28 to March 13, does not reflect the gloom that has pervaded markets this week.

“If we run this survey today, the index will be significantly lower because of what has happened in the rest of the world and financial markets,“said Antonio Fatas, Singapore-based economics professor at global business school INSEAD.

“If Europe and the US can’t control the coronavirus, we’re going to have a few more weeks of explosion in cases and see a massive disruption to the world economy.”

Despite an emergency rate cut by the US Federal Reserve and similar measures by policymakers globally to shore up liquidity, financial markets had their worst day in 30 years on Monday as investors worry that central banks may have spent all their ammunition even as the virus spreads further.

The coronavirus pandemic was cited as the main business risk by respondents in the survey, followed by continuing trade tensions and a global recession.

Just a month ago, markets were hitting record highs on hopes the outbreak would largely be contained in China. But there have now been more cases and deaths outside mainland China.

“I don’t want to look at any economic indicator but only how the contagion is spreading. Because that’s going to drive economic activity, the ability of people to go back to work, to go to restaurants, to fly back,“Fatas said. – Reuters