Cost pressures continue to ease according to accountants worldwide, but remain elevated by historical standards, said ACCA recently.
The ACCA and Institute of Management Accountants (IMA) Global Economic Conditions Survey (GECS) shows declining confidence among accountants globally for the third consecutive quarter in Q4 2023, consistent with a further moderation in global growth.
The survey doesn’t suggest that a major downturn is likely though, ACCA pointed out.
- Confidence rebounded sharply in North America after a large fall in Q3, and there were improvements in South Asia and the Middle East.
- In contrast, confidence fell for the third consecutive quarter in Western Europe.
- Confidence also declined materially in Asia Pacific, perhaps reflecting concerns about the state of China’s recovery. Meanwhile, confidence fell sharply in Africa, erasing the gains made earlier in 2023.
- Fears among accountants that their customers or suppliers could go out of business don’t look alarming by historical standards.
- But with corporate bankruptcies rising, and monetary policy tightening working with a lag, it would be a surprise if there isn’t a rise in concerns in 2024.
- According to the risks section of the survey, global accountancy professionals ranked economic risks, talent retention, and regulatory change as their top three risk priorities, respectively.
- This compares with 12 months earlier, when regulatory change came first, followed by cybersecurity and economic risks.
- Geopolitics has also significantly moved up the ranks of risk priorities.
- Those in financial services tend to view geopolitical risks through the cybersecurity lens, while in the corporate sector, they perceive the threats more as 'business-critical' risks, such as supply chain disruption.
“Concerns among accountants about cost pressures eased slightly again in the latest quarter, but remain elevated by historical standards,” said Jonathan Ashworth, chief economist at ACCA. “This suggests that the risk is that financial market expectations may be too optimistic on the timing and magnitude of central bank rate cuts in 2024.”
‘The very large rise in North America puts confidence in the region close to its long-term average,” said Susie Duong, PhD, CMA, CPA, CIA, EA, senior director of research and thought leadership at IMA. “This perhaps reflects increased confidence that the U.S. Federal Reserve may be able to pull off a soft landing in 2024. However, the employment index fell sharply, together with moderate decline in capital expenditure and new orders, suggesting that companies are cautious about expansion before it becomes obvious how the economy performs.”