ASIAN firms are the most optimistic they have been all year, even as they continue to worry about persistent cases of Covid-19 and possible scarcity of vaccines in parts of the world.
According to the Thomson Reuters/INSEAD Asian Business Sentiment Index, the outlook for Asian companies in the next six months jumped to 62 this quarter, from 53 in the third quarter.
A reading above 50 indicates a positive outlook; this is the highest figure recorded since Q4 2019. A total of 101 firms were surveyed across 11 Asia-Pacific countries.
About half (44 per cent) of the companies polled said they were positive about their outlook for the next six months, up sharply from 28 per cent in Q3 and nearly 8 per cent in Q2.
About 58 per cent of the firms said they did not hire or lay off people this quarter, and a fifth said staffing levels were lower. This is similar to figures presented in Q3. In Q2, 62 per cent of the companies said they had cut jobs.
"While I still see some uncertainty, the numbers are good," said Singapore-based INSEAD economics professor Antonio Fatas. "It looks like a recovery that is taking speed and where more businesses feel confident."
The report noted that while the US and Britain have already started vaccinating their populations, few Asian countries expect to get significant doses of vaccines in the coming weeks. Singapore received its first shipment of the Pfizer-BioNTech vaccine on Monday. It is the first Asian country to receive the vaccine.
Indeed, more than half of the respondents polled flagged the possibility of vaccine scarcity, at least initially, as their biggest risk. Others flagged as their top risks a withdrawal of stimulus by central banks, and US president-elect Joe Biden keeping a tough stance on China.
A quarter of the companies in the survey said they were most concerned about businesses cutting jobs, which would hurt consumption.
"After a year marked by economic contraction, 2021 stands to be the 'year of the phoenix', with a strong rebound in global gross domestic product and corporate earnings, thanks to the roll-out of vaccines and substantial policy support," said Cesar Perez Ruiz, chief investment officer at Pictet Wealth Management.