CONFIDENCE among Asian companies in the June quarter fell to its lowest since the 2008-09 financial crisis, as a U.S.-China trade war disrupts global supply chains and shows little sign of easing soon, a Thomson Reuters/INSEAD survey found.

The Thomson Reuters/INSEAD Asian Business Sentiment Index tracking companies’ six-month outlook worsened in the three months ended June to 53, versus 63 in the previous two quarters.

A reading above 50 means optimistic respondents outnumbered pessimists, but worries about the threat of a prolonged trade war drove the index to its lowest since the June quarter of 2009, when the first edition of the survey was released.

“There was a big dip [in the index] three quarters ago, and we felt it was the uncertainty about the trade war and people were worried about the future,” said Antonio Fatas, a Singapore-based economics professor at global business school INSEAD.

“We get a sense after four quarters of low numbers that now, it’s not just uncertainty. This is a true slowdown in growth. We see activity declining — it’s not just the expectation that activity will decline,” Fatas added.

For a fourth straight quarter, survey participants cited the global trade war as the chief risk to business, followed by Brexit and a slowdown in the Chinese economy.

The survey interviewed 95 firms in 11 Asia-Pacific countries that together contribute about a third of global gross domestic product and are home to 45 percent of the world’s population.

It was conducted from May 31 to June 14.

The index staying above the neutral point of 50 suggests companies in the region are not expecting an imminent global recession, but the decade low indicates caution was rising as trade tensions mount.

The United States and China have been embroiled in a trade standoff since last year, marked by tit-for-tat import tariffs. Talks between the two to reach a detente ended last month without a deal.

Washington’s move to put Huawei, the world’s No.2 maker of smartphones, on an export blacklist that bars U.S. companies from doing business with the Chinese firm without special approval further ratcheted up tensions.

Still, U.S. President Donald Trump has said that a deal would “eventually” be struck.

BNP Paribas, however, does not expect a resolution to the trade war this year, said Hong Kong-based Manishi Raychaudhuri, Asia-Pacific equity strategist at the banking group.

U.S.-based Broadcom Inc., which makes radio-frequency chips used in Apple’s iPhones and iPads, last week forecast a US$2 billion hit to annual sales from the trade tensions and the U.S. ban on Huawei.

Huawei has acknowledged a harder-than-expected hit from the ban and slashed its revenue forecast for the year.

China’s economy is also feeling the heat, with industrial output growth sliding to a 17-year low in May.

(SD-Agencies)