ACCA’s GECS (global economic confidence survey) indicates that global confidence index in Q2 fell slightly after the bounce in Q1.
But the global poll of 1,162 accountants shows that confidence remains above the record low reached at the end of 2018, consistent with a modest global economic slowdown, the accounting body said.
In addition, the global orders index—an indicator of activity—also fell in Q2 and is consistent with this view, ACCA observed.
Significantly, global cost pressures eased again, with 45% of respondents citing this as an issue, down from 55% a year ago, it added.
Sentiment in the US and China revealed high levels of uncertainty, with the US results showing a sharp fall in confidence to the lowest level in eight years, largely due to trade tensions as tariffs were increased to 25% on a range of Chinese imports, said ACCA.
The orders index points to a slowdown in US growth through the second half, but no recession, the organization added.
Chinese data indicates a weakening picture with significant falls in confidence and orders in the quarter, according to ACCA.
The short term outlook is relatively weak with data so far this year showing falling imports and anaemic industrial output, Michael Taylor, chief economist at ACCA pointed out.
“The ACCA survey points to a slowing global economy with significant downside risks reflected in weak confidence,” said Taylor. The biggest risk to the global economy remains a significant further escalation in the US-China trade war. A sharp slowdown in China and a no deal Brexit are additional downside risks.”
Though the US economy is also slowing, ACCA believes that the much anticipated US rate cut might alleviate the situation.
“The Fed is very likely to cut interest rates later this month, helping to sustain the economic expansion, which has now lasted uninterrupted for 10 years,” said Raef Lawson, Ph.D., CMA, CPA, IMA vice president of research and policy.
ACCA predicts 3%-3.5% global growth this year, compared with last year’s 3.8%.
The good news is that persistent sub-target inflation, notably in the US and euro area, gives central banks the opportunity to ease monetary policy, ACCA said.