Weak global economic growth looks likely for the rest of 2022, according to the latest edition of the Global Economic Conditions Survey (GECS) from ACCA and the Institute of Management Accountants (IMA).
The new report indicates that economic confidence among finance professionals and accountants in North America has fallen back to levels seen during the height of the COVID-19 pandemic in 2020.
The Q2 Global Economic Conditions Survey (GECS) – conducted in mid-June – pointed to a decisive deterioration in the global economic outlook due to the effects of the war in Ukraine and the surge in inflation across much of the world, said ACCA.
While risks have risen, indications are that a global recession will be avoided, the report notes.
However, while confidence among financial professionals has dropped sharply, the global confidence level remains above the low-point reached at the height of the COVID-19 pandemic, the report adds .
The two “fear” indices – reflecting the level of concern that customers and suppliers may go out of business – were little changed in the Q2 survey, both edging slightly higher, ACCA pointed out.
Both indices have fallen back from the extreme levels seen in 2020 but are still above pre-pandemic levels, the accountancy body said.
The largest fall in confidence occurred in the Middle East, a region more exposed to trade with Russia/Ukraine, while North America and Western Europe recorded especially large falls due to big jumps in inflation in recent months, according to the report.
Only in North America has confidence fallen back to levels seen during the height of economic uncertainty in 2020, ACCA said, adding that the falls in confidence in other regions were still significant albeit more modest.
While weak global economic growth is the trend, the drop in confidence is much greater than the reported drop in orders.
Indeed orders – a lead indicator of economic activity – are above their long-run average, ACCA said.
The employment index is also well above its long-run average, despite dropping in Q2, ACCA noted.
Jobs markets are tight and employment is rising in many economies, providing some offset to the effects of high inflation on real incomes, the organisation added.
In a list of top concerns since the Q1 survey, financial professionals have swapped concerns over COVID for worries about inflation and rising interest rates, according to the report.
But for the third GECS in a row, supply shortages and supply chain issues have remained the highest ranked risk, ACCA observed.
