Asia-Pacific firms more cautious

BUSINESS SENTIMENT in the Asia-Pacific region has dropped due to rising costs and concerns over the global recovery, a Reuters survey released yesterday showed.

While still positive, Reuters said its Asia Corporate Sentiment Index had fallen to 71 in second quarter from 80 three months earlier.

Sentiment in the Philippines was said to be mostly positive — a view corroborated by industry groups — but overall Southeast Asian firms have become more cautious, the survey showed.

Reuters said its index was compiled from a June 2-10 poll of 100 executives from top Asian companies. Of the 77 responses received, 48% were positive or very positive, a significant drop from 62% in the first quarter.

It said 27 respondents tagged global economic uncertainty as the “biggest risk to the business outlook over the next six months”, while 21 cited rising costs as their primary concern.

China was said to be one of the most optimistic in the region, while India was described as less bullish. South Korea and Taiwan were positive, Australia turned bearish and Japan was neutral.

By sector, finance was generally positive, retailers “bright,” properties also positive, auto firms cautious and tech neutral.

Asked to comment, Semiconductor and Electronics Industries in the Philippines, Inc. President Ernesto B. Santiago reiterated a view that an improvement from the first semester’s flat growth was forthcoming.

“The second quarter is flat due to [the disaster in] Japan, [but] the third and fourth quarter would turn the corner and [growth is] expected to be strong,” Mr. Santiago said in a text message.

Rafael G. Villarreal, Motor Vehicle Parts Manufacturers Association of the Philippines president, said in another text message: “The outlook is positive for exports of [automotive] parts and components, but as a whole, the outlook is neutral for the local car industry.”

The Bangko Sentral ng Pilipinas, in a report released late last month, said Philippine business sentiment remained generally positive for the second quarter but was down from three months earlier given global developments and domestic constraints.

The confidence index for the current quarter was 31.8%, a drop from 47.5%. The caution extended to the quarter ahead, with the index falling to 33% from 59.4% in the previous survey.

The top constraints encountered during the current quarter were competition, weak demand and financial problems, the survey found. The BSP said these risks had been consistently identified since the third quarter of 2009.