Global confidence improved significantly during Q3 of 2020 despite fears of a prolonged recession resulting from the current pandemic, said ACCA and IMA (Institute of Management Accountants) recently.
According to the Q3 2020 Global Economic Conditions Survey (GECS) — done jointly by the ACCA and the IMA, while there may be some economic expansion late this year, there is increasing expectation that significant economic recovery will be pushed into 2021.
The survey took place between August 25 and September 8, 2020 and collected responses from 1,067 ACCA and IMA members around the world, including more than 100 CFOs, according to ACCA, adding that the COVID-19 questions elicited 789 responses.
Activity indicators covering orders, capital spending and employment all bounced back to some degree from low points reached in the second quarter survey, pointed out ACCA.
The global orders balance recovered by nine points in the third quarter, signalling a modest turnaround, ACCA added.
Other measures, including concern that customers and suppliers may go out of business also improved slightly from extreme levels last time, the accountancy body noted.
The most optimistic region
In addition, the survey found that confidence in the third quarter recovered strongly to a three-and-a-half-year high as the deep gloom caused by lockdowns lifted in most regions.
While North America is the most optimistic, South Asia has the greatest proportion of respondents not expecting recovery until next year, survey results indicate.
In North America, the orders balance recovered significantly in Q3 but with the exception of previous quarter, which is at a record low level, ACCA said.
The increase in confidence this quarter was the largest quarter-to-quarter increase in the history of the survey, reflecting the transformation in the economic outlook between June and September, the organisation pointed out.
Overall, the North American region is consistent with a reasonably strong recovery in the second half of the year, according to ACCA.
As expected, the March to June quarter witnessed some record quarterly falls in GDP, including 9.1% in the US, said ACCA, adding that the current forecast for quarter on quarter GDP in the third quarter is around 7% in the US.
Further, expectations of substantial economic recovery have shifted decisively towards later in 2021 over the last three months, including above 50% in North America, according to the accountancy body.
Permanent changes likely
While most economic shocks do not result in permanent changes in economic behaviour, the COVID-19 shock is likely to be different, Warner Johnston, Head of ACCA USA.
That is a result of the continued implementation of social distancing rules and other containment measures in the foreseeable future, he said, adding that consumer demand will be impacted in particular areas.
“It already has lasted for the first three quarters of 2020 and will do so well into 2021,” Johnston noted. “This, and the nature and scale of the economic impact, means that permanent changes to the structure of economies are inevitable.