The global economy is bouncing back in terms of economic confidence, orders, employment and spending, said ACCA recently when releasing results of its survey jointly conducted with IMA (Institute Management of Accountants).
The worldwide survey of 1,000 senior accountants and finance professional recorded the biggest jump in economic confidence this quarter in the 12 years it has been running, ACCA noted, adding that the balance of those more optimistic minus those less optimistic increased by 26 points in this survey.
The Global Economic Conditions Survey (GECS) is consistent with the view that the global economy stands a good chance of reaching its pre-pandemic level of activity later this year, ACCA pointed out.
- North America has reported the strongest results and the US economy is likely to achieve growth of more than 6% in 2021, with South Asia and Asia Pacific also showing strong results for confidence.
- Orders grew globally, apart from in Africa, which was the only region to see a fall in the orders index.
- Different levels of economic prospects in the largely optimistic global picture are attributed to three factors that heavily influence the economy — the rate of vaccinations, the amount of government fiscal stimulus and savings banked by individuals during restrictions and lockdowns.
The “fear” indices
The survey also reported some more mixed results, according to ACCA.
The ‘fear’ indices, which track concern about customers and suppliers going out of business, are still above long-term averages, reflecting continued uncertainty, the accountancy body observed.
In addition, near-term cost concerns increased, to a balance of 33 in Q1 from 24 in the previous survey, reflecting higher commodity prices and other costs, as the global economy recovers, ACCA pointed out.
But cost concerns are still below their long-run average, the organisation added.
The prospect of a strong economic rebound has also raised questions about the possibility of sustained increases in inflation, with two-thirds of respondents saying they expect it to rise within five years, said ACCA.
However, the report concludes that the effect of the recessions of 2020 will keep a lid on inflation for the next year in most countries, with an expected steady rise in the next three to five years, ACCA noted.
‘The global orders index also increased in the Q1 survey and is consistent with further recovery in the global economy into the second half of 2021,” said Michael Taylor, chief economist at ACCA. “We now expect global economic activity to return to its pre-Covid level from Q4 2019, later this year.”
Raef Lawson, Ph.D., CMA, CPA, IMA vice president of research and policy, pointed out that the current path to global economic recovery differs from the financial crisis of 2007 to 2009, which resulted in a long period of subdued growth as private sector balance sheets were rebuilt through increased savings.
This crisis is different as its root cause is health and not economic, Lawson said.
“For now, global Covid-19 infections are high relative to the vaccination rate, so risks remain significant,” Lawson noted. “But the huge government support provided to both households and companies over the last year leaves both well-placed to resume spending once the health crisis is over.”