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scoutAsia's Recession Watch

In direct contrast to last week's post about continued optimism, this week we will focus on growing signs of (mostly, global) gloom:

**A quarter of Japanese CEOs expect the world economy to deteriorate over the next six months, according to a new Nikkei survey , a two-fold increase since the previous poll in December.

**Taiwanese business leaders are even more downbeat: almost half of them expect an economic downturn this year, says a new survey from PwC.

**This is being reinforced by profit warnings. Samsung Electronics, a bellwether for large sections of both consumer and industrial demand, warned this week that its semiconductor, liquid crystal display and mobile phone divisions are all going through tougher times this year.

**And in a beautifully circular piece of reasoning, some analysts are growing concerned that Chinese exports may be affected by a slowing Europe...when the gloomy business forecasts coming out of Europe are mostly due to slowing exports to China.

Now it is certainly true that talk of an economic contraction is rising. Searching through scoutAsia's news archive of almost 30 Asian media sources, the term "recession" has been mentioned in more than 120 articles in every month so far this year (and more than 180 times in January). By contrast, there were only around 70 mentions a month last summer (May, June and July of 2018). 

However, many of these pieces are speculative and based on business sentiment rather than hard, statistical evidence. And the majority are focused on signs of weakness in Europe and the US, rather than on Asia itself - though China's decelerating economy is a genuine worry.

So here is how to square the circle, in my view. Asian business leaders may well be increasingly pessimistic about other parts of the world, sensitive to a gloomier global mood music and aware of looming long-term problems (bad demographics, too much debt, rising populism and so forth). Yet they can remain bullish on their own particular company and sector based on close observation and real, internal data. If it comes to a choice, I would trust specific optimism over general gloom. 

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