Singapore firms are the most spooked in Asia by the gloomy economy

Blame it on weak global demand and distressed O&G sector.

Singapore emerged as the most pessimistic economy in Asia in 3Q16 with its index tumbling 25 points to 38 compared to the previous period, the steepest downturn among all economies included in a poll.

The latest Asian Business Sentiment Survey by Thomson Reuters and INSEAD blamed the weak global demand for the city-state’s outlook decline. Labour shortage and a flagging oil and gas sector were also major factors that weighed on growth.

Companies also cited rising corporate debt in China and energy prices as key risks.

A record 17 Singapore firms participated in the survey.

Meanwhile, the overall sentiment in Asia hit a 5-quarter high at 68 in the third quarter against 67 three months ago as China economy and Brexit concerns ease.

“The risks in China look more manageable. Brexit has not yet resulted into a fullblown crisis so there is a hope that it will be contained,” said Antonio Fatas, a Singapore-based economics professor at INSEAD.

A total of 118 businesses across 11 economies have been surveyed for this period with the Philippines (94 in Q3) finishing the most optimistic economy for the fifth straight quarter.