Faith in the global economic recovery at a four year high in Q3 2013, reveals Global Economic Conditions Survey | ACCA Global
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Once again, perceptions of the recovery improved much faster in Q3 2013 than business confidence, which in turn improved faster than the underlying fundamentals. Our Q2 report warned that much of the growth in business confidence at the global level depended on a surge of monetary stimulus. This dependence has, if anything, increased in the third quarter, but in emerging markets the flow of capital has, gone into reverse
—Emmanouil Schizas, senior economic analyst, ACCA

Report cautions that the recovery is increasingly dependent on current and future monetary stimulus

Confidence in the global economic recovery among finance professionals is now the strongest it has ever been since the Global Economic Conditions Survey (GECS) began in early 2009. 

At the global level, more than half (53%) of respondents now believe that economic conditions are improving or about to do so, up from 47% in the previous quarter. The share of respondents expecting stagnation or further deterioration fell from 50% in Q2, to 43% in the third quarter. It is the first time in the history of the survey that the optimists have outnumbered the pessimists. 

GECS is carried out by the ACCA (Association of Chartered Certified Accountants) in partnership with the Institute of Management Accountants (IMA). The 19th edition of GECS surveyed 2,021 finance professionals globally.

Global business confidence also continued to rise, albeit at a slower pace, with 28% of respondents claiming they were more confident about the prospects of their own businesses than they had been three months earlier, up from 26% in Q2. Nearly a third (32%) reported a loss of confidence, down from 35% in the previous quarter.

Commenting on the findings, Emmanouil Schizas, senior economic analyst at ACCA, said: 'Once again, perceptions of the recovery improved much faster in Q3 2013 than business confidence, which in turn improved faster than the underlying fundamentals. Our Q2 report warned that much of the growth in business confidence at the global level depended on a surge of monetary stimulus. This dependence has, if anything, increased in the third quarter, but in emerging markets the flow of capital has, gone into reverse.' 

Schizas continues: 'This is the result of a major shift in demand for riskier assets, as investors adjust to the prospect of central banks reining in their asset purchases, and monetary policy in general.' 

The UK is leading the European recovery, with 62% of respondents believing that the economy is improving or about to do so, up from 42% in Q2 2013. 

UK respondents also reported improved levels of business confidence in Q3 2013, rising to 42% confidence this quarter from 26% in Q2. Just 20% reported a loss of confidence, down from 30% in the previous quarter.

Approval of the UK Government’s economic policies also increased to 25% of respondents surveyed, up from 11% a year ago. As with other European countries, austerity in the UK is increasingly seen as having run its course: respondents are expecting less fiscal retrenchment over the next five years than they had expected previously. Only 10% of respondents felt that the government was likely to cut too much over the next five years. 

Schizas commented: 'These figures suggest that the UK economy has substantially outperformed most major ACCA and IMA markets in the third quarter of 2013. The reason behind this is a dramatic improvement in access to growth capital over the last six months, which has prompted an equally impressive increase in investment and employment. Meanwhile, pressures on cashflow and demand are falling, adding to the sense that conditions on the ground are easing. Importantly, however, business opportunities did not increase in the third quarter of 2013, which suggests there is a limit to how much investment can be sustainably funded through the UK’s new-found liquidity.'

Schizas also comments on how the improvements seen in Europe may not be reflected in other markets: 'Throughout the past 12 months, confidence gains throughout Europe have been very pronounced, and faith in the recovery has risen strongly. The latest quarter has seen this trend accelerate. As Europe appears to have finally emerged from recession and a severe credit crunch, the exodus from emerging market bonds and assets is threatening to plunge much of emerging Asia, Africa and the Middle East into a credit crunch of their own.'

About GECS
This is the 19th edition of GECS. It had 2,021 responses in the third quarter of 2013.