Business sentiment of Asian companies sank to an 11-year low in the second quarter, said INSEAD which recently unveiled results of the Thomson Reuters/INSEAD survey.
About two-thirds of the firms polled flagged a worsening pandemic as the biggest risk over the next six months, INSEAD noted.
While the pandemic's initial impact was reflected in the March survey, confidence during the June quarter fell by a third to 35, INSEAD said, adding that it was the second time the Thomson Reuters/INSEAD Asian Business Sentiment Index has dropped below 50 since the survey began in the second quarter of 2009, the business school pointed out.
A reading above 50 indicates a positive outlook, according to INSEAD, adding that the last time the index showed a reading below that was in its debut quarter, when it hit 45.
About 16% of the 93 companies surveyed also said a deepening recession was a key risk for the next six months, with more than half expecting staffing levels and business volumes to decline, INSEAD observed.
"We ran this survey right at the edge when things were getting really bad," Antonio Fatas, INSEAD Professor of Economics, said of the survey conducted between May 29 and June 12.
Many countries are easing coronavirus-related lockdowns but worries have mounted that another wave of infections could hurt economies that have been battered from weeks of curbs on travel and movement, said INSEAD.
After weeks with almost no new coronavirus infections, China recorded dozens of new cases in recent days, roiling fragile equity markets, the business school noted, adding that South Korea too faces an uptick after early successful containment.
Companies from 11 Asia-Pacific countries responded to the Thomson Reuters/INSEAD survey, according to the business school, adding that participants included Thai hospitality group Minor International, Japanese automaker Suzuki Motor, Taiwanese contract manufacturer Wistron, and Australia-listed Oil Search.
No V-shaped recovery
China, where the novel coronavirus was first detected, reported that industrial output quickened for a second straight month in May, but a weaker-than-expected gain suggested that recovery remained fragile, said INSEAD.
"It tells us that the recovery will take time and it won't be a V-shaped recovery," said Jeff Ng, senior treasury strategist at HL Bank.
Despite governments’ rollout of stimulus measures, recessions in most major economies are still expected to be more severe this year than forecast, Reuters polls of more than 250 economists published in late May show.