There’s a pinch of optimism in Asia despite global economic uncertainty.
While there is an anticipation of global trade expanding by slightly over 2% in 2024, the pace of growth in Asia is forecasted to remain subdued and may not be as robust as it was in previous years, Atradius said.
The key factor inhibiting growth can be attributed to an ongoing underperformance in exports, which is likely to continue in the short-term due to weaker demand from Asia’s main export markets, such as the United States and European Union, and could potentially weaken the domestic resilience shown by Asian economies this year, the firm noted.
One illustration of this is a 6% overall drop in Asian businesses B2B trading on credit over the past year with variations in different markets, the trade credit insurer pointed out.
Taiwan and Singapore saw significant drops, while China and Vietnam experienced an increase in B2B sales on credit, the firm added.
70% of firms expect higher demand for products, services
Despite the uncertainty, Asian businesses’ optimism about growth prospect is clear, as evident evidenced in the findings of the firm’s survey of companies polled in China, Hong Kong, Indonesia, India, Japan, Singapore, Taiwan, and Vietnam for the 2023 edition of the Atradius Payment Practices Barometer survey for Asia, Atradius observed.
The survey revealed that 70% of Asian companies expect rising demand for their own products and services in the months ahead.
In addition to this optimism in Asia about future business growth, the survey revealed a strong commitment among businesses polled in Asia to addressing the challenges posed by deteriorating business-to-business (B2B) payment practices, which are reflective of the vulnerabilities affecting the global economy and marketplace, the firm said.
While the landscape varies from market to market, a common denominator is, therefore, the widespread attention Asian businesses place on maintaining strong cash flow and liquidity, the firm observed.
Robust measures to mitigate cash flow risks are already evident across various Asian economies, notably in China, Japan, and India, the firm added.
More than 50% of companies in the region revealed that they increased efforts to collect overdue B2B invoices during the past 12 months, a policy complemented in each market by specific credit risk management tactics, the firm said.
These efforts had a positive impact, with late payments across Asia declining by 12% over the past year, now affecting 44% of all B2B invoiced sales, the firm noted.
Bad debts also declined slightly, standing at 5% of all B2B invoiced sales, Atradius pointed out.
Companies in Vietnam, Singapore and China reported success in mitigating the impact of late payments, Atradius said.
The survey underscores the adaptability of Asian businesses in the current economic turbulence, emphasising the importance of thorough risk assessment when trading on credit with B2B customers, the firm noted.
