ANY SIGNS OF A RECOVERY in the global economy have disappeared, according to the largest ever survey of finance professionals to be undertaken by Association of Chartered Certified Accountants (ACCA).
The report stresses that while the economic situation is tough, the constant flow of depressing headlines may be making finance professionals even more pessimistic than conditions actually justify.
Three quarters of the 2 873 professionals who took part in the Global Economic Conditions Survey between August 19 and September 7, 2011, thought global economic conditions were deteriorating or stagnating. Nearly half (49 per cent) had lost confidence in the economic prospects of their own organizations, while a similar percentage (45 per cent) thought their governments were not dealing correctly with current economic challenges.
ACCA believes that much of the drop in confidence, especially in Europe and the Asia-Pacific region, is down to a flow of bad news rather than economic fundamentals, which have deteriorated only slightly in the past three months.
Brenda Lee Tang, head of ACCA Caribbean, said: “The weakening in demand and deteriorating access to finance reported by accountants were not sharp enough to justify the strong negative sentiment which they expressed.
“But after taking into account the effects that fear for the future will have on their views, the evidence still points to falling economic activity in the developed nations and a sharp slowdown in emerging economies.
“The drop in confidence could be seen as a result of people’s waking up to trends which have accumulated for the past year or more.
“Globally, demand has proven to be too weak to sustain reliable growth, investment refuses to pick up, and inflation remains high.
“And on top of everything else, it’s still unclear whether the sovereign debt crisis in Europe can be contained, or indeed what it will mean if it cannot,” she said.
Although all regions except the Middle East are now in negative territory in terms of both economic and business confidence, ACCA is particularly conscious of developments in the Asia-Pacific region, which once led the world into recovery.
After falling steadily for more than a year, confidence levels in the region are now comparable to, if not lower than, those in Europe, and economies which have undertaken more international trade (such as Singapore or Hong Kong) appear to be the worst hit.
GECS readings for the Americas, where there were 182 respondents, are generally close to the global average, but the complexity of the region is significant.
Generally, respondents in the Caribbean were more confident about the prospects of their organizations than their North American colleagues (20 per cent reporting confidence gains versus 12 per cent), even though their view of the global economy was gloomier (73 per cent versus 63 per cent anticipating deterioration or stagnation).
In North America, both demand and access to finance appear to be improving, while cash flow problems and business failures are down. The labour market is becoming more subdued and less dynamic.
In the Caribbean, on the other hand, demand is weaker and so business opportunities tend to mostly focus on niche markets or serving the needs of cost conscious customers. That said, the outlook for investment is improving, which could provide a much needed boost to demand. (PR)
