New ACCA Global Economic Conditions Survey
Confidence in Global Economy Grew Substantially in First Quarter, ACCA/IMA Survey Reveals
- Global confidence on the rise: Americas and Western Europe leading
- Uptick in U.S. business confidence (32 percent in Q1 vs. 18 percent in Q4 '11)
- 54 percent still believe global economy is stagnating, but down from 73 percent in Q4 '11
New York and Montvale, N.J., April 23, 2012 - Confidence in the global economy recovered substantially in early 2012, regaining some of the optimism lost over the last year, according to the Q1 2012 ACCA/IMA Global Economic Conditions Survey, the largest global study of professional accountants.
The quarterly survey, conducted by the ACCA (Association of Chartered Certified Accountants) and IMA (Institute of Management Accountants), represents the views of 2,200 professional accountants around the world. The share of respondents reporting confidence gains nearly doubled, from 16 percent in late 2011 to 29 percent, and while the majority (54 percent) still believed the global economy was deteriorating or stagnating, that figure was down from 73 percent the previous quarter.
Economic conditions in the U.S.
Business confidence in the U.S. in early 2012 rose roughly in line with the global average; 32 percent of respondents reported confidence gains, up from 18 percent in late 2011, while 49 percent believe the global economy is recovering or about to do so, up from 26 percent in the previous quarter. Respondents reported a significant recovery in new orders and business investment, and a particularly strong rise in employment, although substantial pressures remain.
All U.S. regions reported substantial, and statistically similar, confidence gains from a similarly low starting point. The exception was the U.S. northeast, where confidence grew the least during early 2012.
"When the results came in, we were a little skeptical and had to consider all of the likely objections first," said Emmanouil Schizas, editor of the ACCA/IMA Global Economic Conditions Survey. "Much of the rise in confidence is being reversed as we speak, as the relief factor subsides, but a lot of it is here to stay."
Looking globally, ACCA and IMA attribute much of the rise in global business confidence to objective improvements in the business environment, specifically new orders, but also warn that relief is an important driver in the short term - especially given the decreasing chances for nightmare scenarios anticipated in late 2011, such as an escalation of the European debt crisis or a hard landing for the Chinese economy.
Confidence gains were fairly consistent across global regions and industries, although the Americas and Western Europe seemed to benefit the most in early 2012, as did manufacturers and distributors, particularly in the high-tech sectors.
The survey reports increasing business dynamism, mostly in the Americas and Asia-Pacific, with businesses securing new orders where previously they would not have and are responding with increased investment and hiring.
ACCA and IMA welcome this development, noting that investment has been subdued at the global level since the end of the 'green shoots' stage of the global recovery which lasted from mid-2009 to mid-2010. Africa is still the most confident of the seven major regions covered by the survey, but it is clearly losing ground.
The professional bodies also acknowledge the contribution of governments in their major markets, many of which showed signs of loosening their fiscal policies to boost a flagging recovery. It is not clear how much longer they can afford to do so, as respondents generally continue to believe that many major economies, including both the U.S. and China, are likely to spend unsustainably in the medium term. On the other hand, finance professionals in Western Europe and other countries experiencing austerity also doubted the sustainability of their own governments' fiscal policies.
"It's too early to say whether the pattern of the modest recovery in 2012 is sustainable," noted Raef A. Lawson, Ph.D., CMA, CPA, IMA vice president of research. "It seems to rely on a sustained recovery of demand in the West, supply in the East, and confidence in sovereigns. It's a precarious balance."
Finally, ACCA and IMA note that the global economy's new-found dynamism has come at the price of rising input prices, and note that if even a timid recovery is accompanied by rising inflation, then a full-blown recovery, if and when it occurs, is likely to provide a challenge for central banks and other policymakers.
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About ACCA (Association of Chartered Certified Accountants)
ACCA is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. We support our 147,000 members and 424,000 students in 170 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. We work through a network of over 80 offices and centres and more than 8,500 Approved Employers worldwide, who provide high standards of employee learning and development. Through our public interest remit, we promote appropriate regulation of accounting and conduct relevant research to ensure accountancy continues to grow in reputation and influence. Visit ACCA at www.usa.accaglobal.com.
About IMA® (Institute of Management Accountants)
IMA®, the association of accountants and financial professionals in business, is one of the largest and most respected associations focused exclusively on advancing the management accounting profession. Globally, IMA supports the profession through research, the CMA® (Certified Management Accountant) program, continuing education, networking, and advocacy of the highest ethical business practices. IMA has a global network of more than 60,000 members in 120 countries and 200 local chapter communities. IMA provides localized services through its offices in Montvale, N.J., USA; Zurich, Switzerland; Dubai, UAE; and Beijing, China. For more information about IMA, please visit the Institute of Management Accountants website.
Editor's Note: Survey findings for specific countries/regions are available upon request.