Cost pressures continue to ease according to global accountants, but remain elevated by historical standards
The ACCA and IMA® (Institute of Management Accountants) Global Economic Conditions Survey (GECS) shows declining confidence among accountants globally for the third consecutive quarter in Q4 2023, consistent with a further moderation in global growth. The survey doesn’t suggest that a major downturn is likely though.
The survey recorded divergent changes in confidence at regional levels. Confidence rebounded sharply in North America after a large fall in Q3, and there were improvements in South Asia and the Middle East. In contrast, confidence fell for the third consecutive quarter in Western Europe. It also declined materially in Asia Pacific, perhaps reflecting concerns about the state of China’s recovery. Meanwhile, confidence fell sharply in Africa, erasing the gains made earlier in 2023.
Fears among accountants that their customers or suppliers could go out of business don’t look alarming by historical standards. But with corporate bankruptcies rising, and monetary policy tightening working with a lag, it would be a surprise if there isn’t a rise in concerns in 2024.
According to the risks section of the survey, global accountancy professionals ranked economic risks, talent retention, and regulatory change as their top three risk priorities, respectively. This compares with 12 months earlier, when regulatory change came first, followed by cybersecurity and economic risks. Geopolitics has also significantly moved up the ranks of risk priorities. Those in financial services tend to view geopolitical risks through the cybersecurity lens, while in the corporate sector, they perceive the threats more as 'business-critical' risks, such as supply chain disruption.
Jonathan Ashworth, chief economist at ACCA, said: ‘Concerns among accountants about increased costs eased slightly again in the latest quarter, but remain elevated by historical standards. This suggests that the risk is that financial market expectations may be too optimistic on the timing and magnitude of central bank rate cuts in 2024.’
Susie Duong, PhD, CMA, CPA, CIA, EA, senior director of research and thought leadership at IMA, said: ‘The very large rise in North America puts confidence in the region close to its long-term average. This perhaps reflects increased confidence that the U.S. Federal Reserve may be able to pull off a soft landing in 2024. However, the employment index fell sharply, together with moderate decline in capital expenditure and new orders, suggesting that companies are cautious about expansion before it becomes obvious how the economy performs.’
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About ACCA
We are ACCA (the Association of Chartered Certified Accountants), a globally recognised professional accountancy body providing qualifications and advancing standards in accountancy worldwide.
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About IMA® (Institute of Management Accountants)
IMA® 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), CSCA® (Certified in Strategy and Competitive Analysis), and FMAA™ (Financial and Managerial Accounting Associate) certification programs, continuing education, networking, and advocacy of the highest ethical business practices. Twice named Professional Body of the Year by The Accountant/International Accounting Bulletin, IMA has a global network of about 140,000 members in 150 countries and 350 professional and student chapters. Headquartered in Montvale, N.J., USA, IMA provides localized services through its six global regions: The Americas, China, Europe, Middle East/North Africa, India, and Asia Pacific. For more information about IMA, please visit www.imanet.org.
About GECS
The Global Economic Conditions Survey (GECS), carried out jointly by ACCA and IMA, is the largest regular economic survey of accountants around the world, in both the number of respondents and the range of economic variables it monitors. The GECS has been conducted every quarter for over 10 years. Its main indices are good lead indicators of economic activity and provide a valuable insight into the views of finance professionals on key variables, such as investment, employment and costs.
Fieldwork for the 2023 Q4 survey took place between 28 November and 12 December and gathered 1,447 responses.