ACCA and IMA say global unemployment is expected to increase sharply, despite economic confidence in Q2 showing small signs of recovery
A worldwide survey of more than 1,000 senior accountancy practitioners found that confidence picked up by 2.5% to -40 after capitulating to a record-low in Q1 with the world reeling from the Covid-19 fallout.
The survey highlighted an employment index fall of 13% to a nine-year low of -55 points. This is likely to put jobs at risk, and represents a significant challenge for job seekers, businesses and governments around the world.
The report Global Economic Conditions Survey (GECS), jointly published by ACCA and Institute of Management Accountants (IMA) reveals:
- Global confidence recovered slightly from the record low reached in the Q1 survey
- Optimism that recovery is in prospect in the second half of the year, notwithstanding the collapse in activity through the first half
- Government spending expectations fell by more than 2.5% compared to Q1
- All regions globally in expected unemployment rise
The report indicated the severity of the present global slowdown, looking specifically at the change in measured concern about customers and suppliers going out of business. Both these series had trended sideways at relatively low levels in recent years but shot up to record highs in Q2 – to 23% for suppliers and 47% for customers.
Michael Taylor, chief economist at ACCA, revealed there was relatively little divergence in confidence between regions owing to the global nature of the coronavirus economic shock.
He said: ‘Globally orders and employment indices plummeted to record lows in the latest survey, consistent with the most severe recession in decades. By contrast, global confidence recovered slightly from the record low reached in the Q1 survey.
‘Recovery in confidence from Q1 lows can be interpreted as optimism about economic prospects over the second half of the year. This is especially likely in Asia Pacific which emerged first from lockdowns and where confidence rebounded strongly to its highest level in a year.
‘In other regions, such as North America and Europe, the recovery in confidence was modest but in stark contrast with the large fall in orders in both regions. But confidence fell further in Africa and the Middle East, in both cases to record lows.’
Raef Lawson, IMA vice president of research and policy, said: ‘Confidence in Q2 was a mixed picture and globally there was a modest bounce from the record low in Q1. This unusual combination of very weak orders but slightly better confidence can be interpreted as expectations of a turning point – an unprecedented collapse in activity in the first half of the year, to be followed by some degree of recovery in the second half.’