Despite positive data on the resilience of the region to external shocks, the trade war and continued Brexit uncertainty are rattling chief financial officers and group treasurers in Asia Pacific, according to a new poll by JP Morgan.

At the bank’s Asia Pacific CFO and Treasurers forum in Shanghai earlier this month, more than 150 respondents from 130 global corporations were polled on the biggest risks to their businesses for the next six to 12 months, and the results are sobering if not entirely unexpected. As many as 30% ranked a potential global recession as the top challenge, followed by 27% expressing caution over the impact of global trade tariffs and 24% over an emerging markets slowdown. Meanwhile, the outcome of Brexit is keeping 9% of those surveyed up at night.

“Clearly, the concerns over the impact of headwinds in the global macro environment are front and centre in the minds of the top CFOs and treasurers of global corporations. While JP Morgan’s view is not for a recession, growth is expected to slow in the coming quarters, with global growth for 2019 forecast at 2.7% and dipping to 2.5% in 2020. We still see growth opportunities especially in emerging Asia but the geopolitical events are somewhat clouding sentiment,” says Oliver Brinkmann, head of corporate banking, Asia Pacific at JP Morgan.

The fact that global trade tariffs feature so highly among treasurers’ worries is unsurprising. Last year, G20 economies applied a record number of trade-restrictive measures between mid-May and mid-October, prompting the World Trade Organization (WTO) to call for immediate action to de-escalate global trade conflicts.

In a recent research note, Sian Fenner, lead Asia economist at Oxford Economics, said: “We estimate that trade diversion effects caused by the US-China trade war could potentially amount to around US$147bn.”

According to the UN’s latest International Yearbook of Industrial Statistics, published in March, world manufacturing value-added fell by 0.2 percentage points in 2018 versus 2017 amid growing uncertainty from the trade war and Brexit. And as home to six of the 13 economies in manufacturing decline, including both China and Japan, Asia is the hardest-hit region by the slowdown.

Although analysis shows that Asia ex-China is likely to see the biggest gains as bilateral tariffs alter global competitiveness to the advantage of firms operating in countries not directly affected by them, Fenner adds: “In the short run, however, production capacity constraints will likely limit any of these benefits, and still be outweighed by the wider losses caused by the trade disruption.”

But corporates are fighting back, according to the survey, which finds that CFOs and treasurers are taking action to mitigate the impact of global supply chain disruptions on their business. Two-thirds of respondents are either exploring pricing options with suppliers, or seeking alternative suppliers. Meanwhile, about 15% said they were shifting production from China to other countries.