YPO, the premier chief executive leadership organization in the world, announced that economic confidence climbed significantly amongst its members in Asia in the second quarter of the year. Business leaders in Asia reported the most positive economic outlook of any region in the world, as the YPO Global Pulse survey reported an upswing of 2.9 points to 62.9 in Asia, the highest level since the first quarter of 2015.
The positive outlook for Asia was driven primarily by an increase in confidence in India, which climbed 1.6 points, landing at 68.0. This upswing in confidence follows an impressive GDP growth in 2015 and projections for similar economic performance in 2016 and 2017.
Elsewhere, the picture was mixed, with some countries reporting improvements in business confidence over the second quarter, while other countries remained relatively stable. Malaysia and Hong Kong both saw marked significant increases in confidence, rising 8.4 and 8.6 points to land at 59.8 and 54.5, respectively. Business confidence in Japan remained flat, edging down 0.3 point to 54.0, and in Singapore confidence rose 0.4 point to 54.9. In China, the region’s largest economy, confidence slipped 1.8 points to 62.2 but remained firmly within optimistic territory.
“Despite ongoing concerns about the short-term stability of the global economy, confidence within Asia’s two most important economies, China and India, remains strong,” said Shiyin Cai, founder and CEO of Dialogue in the Dark and regional communications officer for YPO Southeast Asia Region.”Business leaders across Asia will be looking to take advantage of favorable economic conditions the rest of this year, while keeping a close eye on key economic indicators around the world.”
Worldwide, the YPO Global Pulse Index for the second quarter of 2016 rose 1.4 points to 59.7, its highest level for a year. In line with Asia, most regions around the world enjoyed a modest increase in confidence levels, with the notable exception of the European Union, where confidence eroded following the Brexit referendum result in the United Kingdom. The United States climbed 1.2 points to 60.8, its highest level for a year. Latin America climbed 3.6 points to 54.4, while the Middle East and North Africa remained almost unchanged, edging up 0.3 point to 55.9. Africa increased 0.6 point to 53.8, remaining the world’s most pessimistic region. Only the European Union saw a significant decline in confidence, slipping 3.1 points to 58.5, its lowest score in three years.
Key future expectations in Asia
CEOs in Asia bullish on sales, hiring and investment projections. Business leaders in Asia remained optimistic with regard to expectations on future sales, employment and fixed investment, the three major components of the YPO Global Economic Index.
In the next 12 months, almost three-quarters (72%) of business leaders in Asia expected to increase sales within their organisations, compared to 59% in the previous quarter. In terms of hiring expectations, 38% of business leaders expected to grow their workforce, an increase from the first quarter of the year when only 30% believed they would increase headcounts. Similarly, half of business leaders (49%) predicted an increase in fixed investments over the next 12 months, compared to 45% the previous quarter.
Confidence rebounds within ASEAN economies. Confidence rallied within the ASEAN countries during the second quarter of the year, on the back of a modest weakening of the dollar and signs that the slowdown in the Chinese economy is stabilising.
The YPO Global Pulse Index for ASEAN countries — Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Myanmar (Burma), Cambodia, Laos, Vietnam — jumped 3.6 points to 60.5, its highest level since the first quarter of 2015. While this still trails the wider regional score for Asia, it is in firmly optimistic territory.
Indian business leaders are the most confident in the world. Once again, confidence in India surpassed all of the other leading economies in the world. The IMF predicted that growth within India will stay at its current rate of around 7.5% for 2016 and 2017, cementing its position as the fastest growing economy in the world.
Unsurprisingly, business leaders in India are bullish about the prospects for their own companies in the next year. In terms of sales, 83% of CEOs expected to grow revenues in the next 12 months, versus only 4% who anticipated a decline. More than half (57%) predicted to increase investment in that period, and 42% expected to increase the size of their workforce.
Confidence in Australasia holds steady. The YPO Global Pulse Index for Australasia remained relatively stable, dropping 1.0 point to land at 58.3. The Australasia score has hovered between 58.0 and 62.0 for the last three years.
The picture is unlikely to change significantly in the second half of 2016. Nearly half (47%) of CEOs forecasted that there would be little or no change in the business and economic conditions affecting their organisations over the next six months. A quarter (24%) expected conditions to improve, and 29% expected the economic landscape to deteriorate during the same period.
However, CEOs in Australasia remained confident about the prospects for their own organisations over the next year, particularly when it came to revenue growth, with 61% of CEOs expected to grow revenues. More than a third (35%) expected to boost headcount within their organisations, while 36% projected an increase in fixed investment in the next year.
YPO Global Pulse Confidence Index
The quarterly electronic survey, conducted in the first two weeks of July 2016, gathered answers from 2,388 YPO chief executive officers across the globe, including 229 in Asia and 115 in Australasia. Visit www.ypo.org/globalpulse for more information about the survey methodology and results from around the world.