Finance professionals believe there will be a renewed global economic downturn in 2012 as the largest ever quarterly survey of professional accountants shows that international trade continued to dry up at the end of last year.
The latest survey of 3,775 professional accountants, including 1,414 senior executives, from around the world, is the result of the collaboration between two major professional bodies. ACCA (the Association of Chartered Certified Accountants), is the global body for professional accountants and has run the Global Economic Conditions Survey since 2009. It has now joined forces with the Institute of Management Accountants (IMA), the world's largest and most respected US-based association focused exclusively on the management accounting profession, to develop an even more robust and powerful record of the state of the global economy.
Their views paint a sobering picture of the global economy, says report author Manos Schizas, senior policy adviser with ACCA: 'Almost three quarters of the finance professionals we sampled believe that the global economy is either deteriorating or stagnating, with nearly half reporting a loss of confidence in the prospects of their organisations during the last quarter of 2011.
'Once again, the biggest loss of confidence came in Hong Kong, Singapore and Cyprus, all countries heavily exposed to international trade and cross-border financial activity, which also reported some of the worst perceptions of the global economy; this among other things suggests to us that international trade is in decline' said Dr. Raef Lawson, vice president of research at IMA.
Similarly, the survey found that professionals in utilities firms, which are often domestically focused and fairly robust to economic conditions, reported some of the strongest net confidence gains. On the other hand, pharmaceuticals and IT/communications firms were some of the hardest hit.
At the regional level, Central and Eastern Europe has performed the worst in terms of business confidence, and the Asia-Pacific region is losing confidence at a rate faster than that of Western Europe. Africa, the Middle East and South Asia remain the most upbeat regions, in terms of both business confidence and respondents’ perceptions on the state of the global economy.
While respondents in some regions have said there are encouraging signs from resilient levels of new orders, the damage done to global demand over the last year has been substantial.
'After three consecutive quarters of weakening demand, the cumulative effect is beginning to take its toll on business, and with banks around the world facing an uphill climb towards capital adequacy tightening finance is now adding to this challenge. The result is a deteriorating outlook for business cashflow around the world which may be driving a rise in business failures. Inflationary pressures, which built up steadily over the past two years, are now easing, but the underlying causes of this trend may be just as worrying as last year’s rise in operating costs,' said Manos Schizas.
In line with this deteriorating outlook, survey findings point to weakening trends in employment and investment globally. ACCA and IMA find this particularly worrying, because these two indicators have remained weak throughout the last three years and are crucial to any kind of sustainable recovery.
Finally, the survey’s findings suggest governments have to perform a tough balancing act in coming years if they are to support a flagging economic recovery. Sustainable fiscal stimulus is a luxury that not all governments can afford, especially among developed nations, while austerity is proving hard to reconcile with sustained growth. As a result, government approval levels are at a record low, just when they are most likely to influence business confidence.
The picture in the UK
Traditionally, respondents in the UK are gloomier than the total sample, and this remained the case in the final quarter of 2011, although both business confidence and faith in the recovery were higher here than in Western Europe as a whole.
Only 10% of respondents said they were more confident in the prospects of their organisations than they had been three months earlier, against 45% who reported a loss of confidence. Regarding the global economy, the clear majority of UK respondents (89%) expected stagnation or outright deterioration in the near future.
On balance, government spending is expected to slow substantially over the next five years, and respondents felt that this will be a drag on economic growth. Intriguingly, however, respondents in the UK saw their country’s version of fiscal retrenchment as more sustainable than did their colleagues in other major ACCA/IMA markets, with the exception of Cyprus.
The full Global Economic Conditions Survey Report for Q4 2011 is available under 'Related Documents' at the bottom of this page.
For more information, please contact
Colin Davis, ACCA news team
Tel: +44 (0) 207 059 5738
Mobile: +44 (0) 7720 347713
Director, Communications and Public Relations
Staff Liaison, Committee on Ethics
IMA® (Institute of Management Accountants)
Notes to Editors
- ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.
- We support our 147,000 members and 424,000 students in 170 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. We work through a network of over 80 offices and centres and more than 8,500 Approved Employers worldwide, who provide high standards of employee learning and development. Through our public interest remit, we promote appropriate regulation of accounting and conduct relevant research to ensure accountancy continues to grow in reputation and influence.
- Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. We believe that accountants bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. Our values are aligned to the needs of employers in all sectors and we ensure that through our qualifications, we prepare accountants for business. We seek to open up the profession to people of all backgrounds and remove artificial barriers, innovating our qualifications and delivery to meet the diverse needs of trainee professionals and their employers.
ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.
We support our 147,000 members and 424,000 students in 170 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. We work through a network of over 80 offices and centres and more than 8,500 Approved Employers worldwide, who provide high standards of employee learning and development. Through our public interest remit, we promote appropriate regulation of accounting and conduct relevant research to ensure accountancy continues to grow in reputation and influence.
About IMA® (Institute of Management Accountants)
IMA®, the association for accountants and financial professionals in business, is one of the largest and most respected associations focused exclusively on advancing the management accounting profession. Globally, IMA supports the profession through research, the CMA® (Certified Management Accountant) program, continuing education, networking, and advocacy of the highest ethical business practices. IMA has a global network of more than 60,000 members in 120 countries and 200 local chapter communities. IMA provides localized services through its offices in Montvale, N.J., USA; Zurich, Switzerland; Dubai, UAE; and Beijing, China.