Economic confidence has fallen by 13% to -45, representing a report low in the 11 year history of a research by the ACCA and the Institute of Management Accountants (IMA).
Global confidence fell to its lowest level on record with big falls in all regions while Asia Pacific confidence is the lowest among all regions and the orders balance fell by more than anywhere else in Q1, results of the global survey of more than 870 senior accountancy practitioners indicates.
In addition, the global orders index, which tends to be less volatile than confidence, also fell sharply, ACCA pointed out.
The regional index of concern about suppliers going out of business jumped to a record high of 22 in Q1 compared with a long run average of 8, ACCA added.
“Confidence fell everywhere and, in most cases, sharply and to the lowest since the survey began in 2009,” said Michael Taylor, chief economist at ACCA. “The Q1 drop in Asia Pacific confidence is less than the global average, but confidence here was already relatively weak as a consequence of US-China trade tensions.”
While the orders balance is closer to real economic activity than sentiment driven confidence, the falls in orders may be less extreme than for confidence, but nevertheless are across the board, he pointed out.
Taylor warned of significantly lower levels of economic output to come in the immediate future.
“Early data releases, such as US jobless claims and monthly activity surveys in the US, euro-zone and UK point to plunging levels of economic output,” he said. “Emerging market economies face additional difficulties as a flight to quality among investors triggers capital outflows.”
‘In normal circumstances, economic conditions change little in the space of just a few weeks. But these are not normal circumstances,” said Raef Lawson, IMA vice president of research and policy. “So, although global confidence and orders both fell significantly in the Q1 survey, they do not convey the true scale of the global economic contraction that is now in progress.”
The economic damage in coming months will be huge, said Taylor. “But if appropriate policy action is taken, then conditions for recovery will be in place when the coronavirus health crisis is substantially over.”