ECONOMY | Staff Reporter, Singapore

Local business confidence hits rock bottom as China wobbles

Almost 66% of firms are bearish this year.

Companies in Singapore are much more bearish compared to their global peers when it comes to business prospects for 2016, according to the latest Global Economic Conditions Survey.

The survey, organised by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA) in the fourth quarter, showed that around 66% of firms said that they had become less confident about their prospects over the preceding three months, compared with 44% globally.

Local businesses are particularly bearish on China, with nearly two thirds or 65% of firms reporting a drop in new orders in Q4. Meanwhile, 38% said that they were concerned about falling orders, compared with 25% globally.

Businesses were also worried that with Singapore’s currency managed against a trade-weighted currency basket, which tends to track the US Fed funds rate reasonably closely, there could be further rises in interest rates which could cause problems for the domestic economy, where strong consumer spending has been helping to offset export weakness in recent quarters.

Globally, confidence remained especially weak in emerging economies. China’s slowdown is affecting business confidence around the rest of the world and is contributing to serious problems in other major emerging economies, especially those that rely on commodity exports, such as Brazil and Russia.

“There is a troubling long list of risks developing for the majority of global businesses. Many are already, unsurprisingly, reacting to falling opportunities by scaling back on capital and employment investments, which will, in turn, contribute to the further slowdown of the global economy. This, combined with the fact that many governments are having to cut back on spending means there are grounds for concern,” said Faye Chua, Head of Business Insight at ACCA. 

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