Sentiments of Asian Business deteriorated in Q2 according to a survey by Thomson Reuters and INSEAD, over June 1-15. The sentiment index, representing six-month outlook from 61 firms, dropped -5pts to 74 in Q2. It hit a seven-year high of 79 in Q1. That’s also the first decline since September 2017 even though reading above 50 still indicates a positive outlook.
Antonio Fatas, a Singapore-based economics professor at global business school INSEAD, said in the released that “Trade war is not a risk but a reality.” He added that “U.S. tariffs are going up against China but also against some of its traditional allies, such as Canada and the European Union. They are all about to retaliate and today we do not see an easy way out.” Fatas also said “companies can try to go around tariffs by moving production to other countries, this is costly and inefficient. It is a short-term solution but not optimal.”
Among responses, worries of global trade war, higher interest rates, rising oil/commodity prices and foreign exchange fluctuation are see as the biggest perceived risks to business outlook.
