Accountants and finance professionals are more confident in the global economy than they have been since early 2023. The latest ACCA (the Association of Chartered Certified Accountants) and IMA (Institute of Management Accountants) Global Economic Conditions Survey (GECS) saw a moderate increase in confidence to put the index just above its historical average.
Add in small increases to the New Orders and Employment indices – both of which are slightly above their averages – and a positive picture emerges of a gradually improving economic outlook. That said, there was a small decline in the Capital Expenditure Index, which remains below average.
Encouragingly, there were gains in confidence in most regions. The rise in Asia Pacific was the third largest on record and may reflect growing confidence in the resilience of the U.S. economy, signs of improvement in the Chinese data and wider global economy, and perhaps rising optimism that Japan may finally be exiting from its decades long battle against deflation. The moderate rise in confidence in Western Europe also suggests that growth may be gradually improving from the weakness of recent quarters.
On a less positive note, global concerns about increased operating costs rose, although they remain below their Q3 2022 peak. Interestingly, concerns about costs eased again in the advanced economies of North America and Western Europe while remaining elevated by historical standards. By contrast, cost concerns rose noticeably in Africa, Asia Pacific, and South Asia.
Additionally, Q1 2024 responses from the Global Risks Survey section of the GECS report demonstrate how the ripple effects of economic uncertainty have been exacerbated by rising geopolitical and talent scarcity challenges. Respondents across all sectors and regions said that they are feeling the impact of talent retention risks, with numerous respondents describing the skills shortage as an epidemic. Cybersecurity is also viewed as a significant threat, especially with advancements in generative AI making ransomware and other cybercrimes increasingly easier and quicker to carry out.
Commenting on this, ACCA chief economist, Jonathan Ashworth, said: “The survey points to some improvement in global growth. Nevertheless, while encouraging, it is no time to celebrate just yet, with the global economy facing many risks and challenges and still set for below average growth in 2024. Moreover, the elevated level of concerns about costs suggests that the major central banks should proceed very cautiously with any monetary easing.”
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By GlobalDataSpecifically discussing the economic backdrop for UK SMEs, ACCA head of technical and strategic engagement, Glenn Collins, added: “Confidence among UK SMEs increased quite materially in Q1 2024 and is only moderately below its historical average. The New Orders Index declined but is close to its average. The Capital Expenditure Index increased sharply for the second consecutive quarter and is now just above average, but the Employment Index declined again and looks weak by historical standards.
“Overall, the broad trend of the key activity indicators (save employment) over recent quarters points to some improvement in the economic backdrop for UK SMEs. Nevertheless, some of the early indicators of corporate stress increased in Q1. Worryingly, problems securing prompt payment, problems accessing finance, and concerns about customers going out of business all rose and are above their historical averages. This does highlight that businesses need to review their finance plans.”
IMA senior director of research and thought leadership, Susie Duong, concluded: “The continued improvement in confidence in North America, and the rise in the other indicators, likely reflects growing optimism that the U.S. economy is on course for a ‘soft landing’ or perhaps no landing at all in 2024. That would clearly be welcome news for businesses, although it means we are likely to see less monetary easing by the Federal Reserve this year than investors expected a few months ago.”
