Upbeat on Asia; Lukewarm on the World
How do you rate the current state of the economy of the country where you are based and of the world economy overall?
Asia is a collection of diverse countries that differ in size, population, economic and political systems.
What is the collective judgement of the region's CFOs? Despite the potential negative effect on Asia from the fiscal and economic problems of Europe and the U.S., the CFOs of Asia's large companies are relatively positive about the current state of Asia's economy, giving an average score of 5.9 on a scale of 1 (extremely weak) to 10 (extremely strong). In contrast, the world economy scored a more cautious 4.7.
Highs and Lows by Country
While the overall score for Asia is positive, there are significant variations between the different countries' scores.
- Asian Economy: CFOs give the current state of the regional economy an average score of 5.9 on a scale of 1 (extremely weak) to 10 (extremely strong). This is higher than their rating for the world economy – and the Asia ex Japan score of 6.5 is higher still.
- World Economy: Asia's CFOs rated the world economy 4.7, a full point lower than their assessment of the regional economy.
- Australian Economy: CFOs based in Australia give this economy an average score of 6.6, reflecting the country's mining and commodities boom.
- Chinese Economy: CFOs in China give their economy the highest score in the region (7.5), despite a slowdown in GDP growth as the government fights inflation and moves to avert asset bubbles.
- Hong Kong Economy: CFOs based in Hong Kong give this economy an average score of 6.1, lower than either Australia or China. This reflects Hong Kong's exposure to risks in Europe and the U.S. due to its reliance on financial services and exposure to international trade.
- Indian Economy: India CFOs give their economy an average score of 6.1. While the country is more inward-looking than others in Asia, and therefore more insulated from negative global trends, it is struggling with inflation and a precipitous fall in the value of the local currency.
- Japanese Economy: CFOs based in Japan are the most pessimistic about their own economy, rating it 4.1. The country has yet to recover from the bursting of its asset bubble economy in the 1990s and a quick succession of prime ministers is unhelpful.
- South Korean Economy: South Korean CFOs give their economy an average score of 6.0, higher only than Japan and slightly lower than Hong Kong and India. Through its huge conglomerates, South Korea is particularly exposed to the global economy.
- Singaporean Economy: CFOs based in Singapore rated their economy 6.4: slightly higher than Hong Kong, its peer in terms of exposure to world trade and status as a financial centre.