Asia-Pacific CFOs more optimistic on regional outlook

Chief financial officers across the Asia-Pacific have become more optimistic about the region's economic outlook, according to Deloitte's Asia-Pacific CFO Pulse survey released on Oct 15.

Net optimism in the Asia-Pacific economy rose 21 percentage points from May to 26 percent, based on responses collected from 363 CFOs across 14 Asia-Pacific markets between Aug 18 and Sept 7.

Meanwhile, net optimism about the global economy rose 24 percentage points, from minus 27 percent to minus 3 percent, although it remained in negative territory.

The overall improvement has not been matched by greater confidence in their own companies.

Net optimism about the CFO's own companies remained broadly stable at 39 percent, suggesting that company-specific risks and opportunities remain key considerations for finance chiefs despite improving economic sentiment.

Business sentiment varied across Asia-Pacific markets. Amid domestic economic transitions, optimism in the Chinese mainland and Japan eased but remained positive in both markets.

In other Asia-Pacific markets, softer inflation and investment related to artificial intelligence helped keep business sentiment more resilient.

Overall, the report pointed to strong exports and AI-infrastructure investment continuing to support the Asia-Pacific's overall growth outlook.

Despite ongoing geopolitical and economic uncertainties, expectations for key business indicators have modestly improved across the region.

About 63 percent of surveyed finance leaders expect revenue growth over the next 12 months, up from 60 percent in May, while 56 percent anticipate higher profitability, compared with 52 percent previously.

"CFOs are becoming more confident in the regional and global economic outlook, but they are not losing sight of the risks affecting their own organizations," Ho Kok-yong, Deloitte Asia-Pacific's CFO program leader, said.

Finance chiefs were increasingly investing in technology, resilience, and agility to respond to emerging opportunities, he added.

Geopolitical instability remained the most widely identified threat to business operations for the coming year, cited by 57 percent. However, that share was 25 percentage points lower than in May as the external environment has stabilized.

Technology also featured more prominently in their growth plans. About 38 percent named it a leading driver for the coming year, 8 percentage points more than in May. Innovation and new products were chosen by 37 percent of the CFOs surveyed as another priority.

More finance chiefs reported gaining value from AI investments, with the proportion rising from 60 percent in May to 68 percent.

However, results varied: 28 percent noted the value delivered fell short of expectations, and 23 percent said the impact remained unclear or difficult to quantify.

The report also warned that the continuing conflict in the Middle East was weighing on energy supplies, with high oil prices threatening to add to inflationary pressure across the region.

"While AI investment has supported strong growth in (the) Asia-Pacific, economic headwinds are building. Inflation, financial-market, and trade risks could all jeopardize the region's momentum," David Rumbens, a partner at Deloitte Access Economics in Australia, said.

Against this uncertain backdrop, resilience has moved from a risk management consideration to a strategic investment priority.

CFOs who consider resilience more important are willing to support resilience-related investments even when expected returns are significantly lower than those of other projects, according to 21 percent of respondents. A further 25 percent would do so even when returns were unclear.

Strengthening resilience through AI, data, and automation was the leading priority, chosen by 42 percent of respondents.