The global economic recovery has run out of steam, reveals ACCA's (the Association of Chartered Certified Accountants) latest Global Economic Conditions survey, with confidence taking a hit and a return to solid economic growth moving further away.
This is despite important improvements in conditions on the ground across most of ACCA’s risk indicators – especially the outlook for employment and investment – and even modest gains in the popularity of government actions to deal with economic turbulence.
opportunities for their organisations as consumption in debt-laden wealthy countries refuses to keep up and governments roll back their support for businesses.
- Business confidence levels have also eased. Only a third now report any business gains at all, while 28 per cent report losses of confidence. Only 29 per cent of respondents adjusted their expectations of their organisations’ incomes upwards in the first quarter of 2010, down from 32 per cent in 2009.
- Accountants have adjusted their views about the duration of the recovery – only 15 per cent now believe the recovery has less than a year to run, down from 18 per cent in late 2009.
Although one in two respondents predicted that the global economy would return to stable growth in one year or less, down marginally from late 2009, ACCA has also noticed a steady rise in the percentage of extreme pessimists – those expecting a recovery in three years or more – which now stands at 11.4 per cent, up marginally from last quarter.
The findings of the Q1 2010 survey suggest further divergence in the economic trajectories of the world’s regions.
This is the only region left where respondents still report an accelerating net improvement in economic conditions. A full 79 per cent believe conditions are about to improve or already doing so. These perceptions are, however, accompanied by easing income expectations (46 per cent revised expectations upwards in Q1 2010 – 50 per cent did so in Q4 2009) and forecasts of a long and weak recovery – 45 per cent of respondents expect a return to stable growth in two years or more.
In the Asia-Pacific region, the pace of recovery, while brisk, appears to have levelled off in almost all respects and business confidence has eased significantly. Just under two thirds (64 per cent of respondents believe conditions are about to improve or already doing so. Alarmingly, respondents here have been reporting a slowing recovery for many months. Only 27 per cent expected a return to stable growth in two years or longer in September 2009; 40per cent did in February 2010. Moreover, members here have reported the first net fall in government support for investment since such measurements began.
These ominous signs could be accompanied by returning inflation. In the Asia-Pacific region, the share of respondents reporting rising operating costs has risen in every quarter since these surveys began, and jumped from 24 per cent to 36 per cent in the three months to February 2010.
The economic outlook in Central and Eastern Europe has finally bottomed out in early 2010. Forty-eight per cent of respondents in the region now believe that economic conditions are about to improve or already doing so, while an equal number believe they are deteriorating or stagnating.
This, however, disguises the true levels of optimism in the region: accountants here expect a quicker recovery than their colleagues anywhere else in the world, with a full 54 per cent predicting a return to stable growth in one year or less. Hence gains in business confidence have been sustained for another quarter, while income expectations are stable.
Despite some improvement in members’ economic outlook, Western Europe continues to languish behind the rest of ACCA’s regional markets across most of ACCA’s measures.
A full 50 per cent of respondents here believe we are at the bottom of the downturn and will stay there for some time yet, while only 12 per cent believe things are getting better – this percentage is nearly four times as high in Africa and Asia. Expectations of the timing of the recovery have been improving very slowly since last May, with 51 per cent of respondents now expecting a return to stable growth in 1 year or less, while confidence has fallen marginally, with 31 per cent of respondents reporting a loss of confidence, against 29 per cent who reported gains in confidence.
The recovery in North America picked up pace in early 2010, with economic indicators finally crossing into positive territory. 56 per cent now believe that conditions are other improving or about to do so, against 43 per cent who think they are deteriorating or stagnating.
Income trends appear to be unchanged - incomes are still falling slightly, with 30 per cent saying their organisations were negatively affected. Confidence trends are similarly negative but stable.
· The fifth ACCA Global Economic Conditions Survey was carried out between 9 and 28 February 2010.
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