6th Southeast Asia Capital Confidence Barometer, October 2013

Economic outlook – growing but mixed sentiments

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With 88% expecting their local economies to grow and 51% expecting to create more employment, corporate confidence in Southeast Asia continues to be high.

SEA respondents are also bullish about the global economy with signs of stability and growth in developed markets. However, this sentiment is not evenly felt across markets with respondents from Indonesia and Malaysia in particular registering a more pessimistic outlook indicating that they expect to see a decline in the economic prospects in their respective local markets over the next six months.

Nevertheless the overall outlook for the region continues to remain positive, conducive for growth and investment, with 76% of the respondents indicating that the current regulatory environment across markets are supportive of such initiatives.

Global economy is improving

There is a significant shift in corporates confidence in the global economy among SEA respondents. Confidence levels have improved dramatically over the past two and a half years as there are signs of stability and growth in developed markets.

However, presumably influenced by the recent market volatility in emerging markets, 18% of the respondents believe that the global economy is declining compared with 14% six months ago. A small shift compared with 60% who say that global economy is improving, the highest to hold such a sentiment over the past 12 months.

What is your perspective on the state of the global economy today?

EY - Economic Outlook chart

Source: Capital Confidence Barometer, Southeast Asia, Outlook October 2013 – April 2014

Mixed optimism in the local economy

48%  

of SEA respondents say that their respective local economies are improving, up from 39% six months ago

There is continued optimism in the local economies among SEA respondents with 48% clearly say that the local economic conditions are improving compared with 39% six months ago. SEA respondents continue to say that key indicators of economic sentiment such as economic growth and employment growth are improving locally in their respective markets.

This sentiment however is not evenly felt across markets, reflecting the diversity in the region. An increased number of respondents from Malaysia and Indonesia say that their local economic conditions are declining. That sentiment is also impacting expectations of corporate earnings – with only 39% of SEA respondents expecting improved corporate earnings compared with 50% six months ago.

While those who are taking a clear position that the local economies are improving overall at its peak compared with the last 18 months, corporate executives in SEA are cautious about the political and economic landscape that is taking shape locally.

45%  

of SEA respondents believe that their own local economies will grow by more than 3%, up from 33% six months ago.

Better economic growth predictions

This positive sentiment was more pronounced in markets such as Vietnam, Philippines and Thailand. The shift towards better economic prospects reflect the medium to long term growth prospects in the region. A sizable 43% continue to say that their local economies will grow only by 1% - 3% compared with 49% six months ago.