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The developed economies of the Asia Pacific region are driving the region’s export plans, while emerging economies have reported a dip in expectations over the same period, according to Grant Thornton’s International Business Report, a quarterly global business survey of 37 economies. The new findings suggest that businesses in these countries are reducing their reliance on China as a trading partner, in light of the Chinese economy rebalancing, and looking to new overseas opportunities.
The Grant Thornton International Business Report (IBR) reveals that across Asia Pacific, export expectations for the next 12 months stand at net 15% in Q3 – exactly the same as in Q2. However, while the proportion of business in emerging APAC economies expecting an export boost has fallen from 14% to 13%, in developed APAC economies it has shot up from 15% to 21% - the highest quarterly figure ever recorded. Australia (28% in Q2 to 38% in Q3), New Zealand (22% to 48%) and Singapore (-6% to 6%) have all recorded healthy increases, while in Japan the figure has increased from 12% to 16% - again the highest quarterly figure for export expectations ever recorded.
Rodger Flynn, Singapore CEO and Regional Head of Member Firm Development, Asia Pacific said, “Export hopes among businesses in Asia Pacific’s developed nations are higher now than we’ve recorded in any previous quarter. Despite uncertainty across the wider global economy, these firms are looking overseas with enthusiasm. It suggests a bounce in expectations since the Trans Pacific Partnership was signed in February, despite the threat of it stalling.
“But these export figures also provide encouraging evidence that in many economies, reliance on China as a trading partner is reducing. China will undoubtedly remain an important export destination for many, but not to the same extent as in previous years.”
The IBR reveals that although business in developed APAC economies are more expectant when it comes to exports, overall economic optimism paints a different picture. Business optimism in emerging APAC has fallen 8pp in Q3 2016 but still sits at 42%. In developed APAC nations, optimism has increased 12pp but is much lower overall at -8%.
Mr Flynn further added: “Optimism in Asia Pacific is travelling in different directions this quarter when split between emerging and developed economies. However, the fact is that emerging nations are still much more optimistic. Most of the ASEAN nations fall into this category and their higher optimism levels are evidence that the ASEAN Economic Community, established in 2015, is creating a belief that greater cooperation between businesses in these countries will become a reality.
“The outlook for Asia as a whole is mixed, but opportunities exist for the most dynamic businesses to make the most of trade flows both domestically and overseas. New partnerships and agreements will open new doors, but firms must be ready to capitalise.”