Global economic confidence bounced back in Q4 2019, to around its level in mid-2019 finds the latest Global Economic Conditions Survey (GECS) from ACCA (the Association of Chartered Certified Accountants) and IMA (Institute of Management Accountants).
But global confidence is below its long run average and the message is continued modest expansion in the world economy early in 2020. The global poll of 2,560 accountants shows that all key regions reported a recovery in confidence with an especially strong bounce in North America.
The global orders index, which is less volatile than confidence, was little changed for the third quarter in a row. Global investment and employment indices were also pretty stable in Q4, close to long run averages. The message from the GECS is steady growth early in 2020 but with no significant recovery. The global inflation picture continues to point to subdued cost pressures, reflecting the effects of a slowdown in economic growth. The GECS points to this continuing, with concerns about rising operating costs falling for six consecutive quarters, to the lowest level in three years. Low inflation means that central banks are in a position to ease monetary policy if activity falters.
GECS Q4 also showed:
· the possibility that suppliers could go out of business was a worry for just over 10% of respondents
· the proportion concerned about customers going out of business fell slightly to 22% but remains close to a five-year high
· orders declined in some areas such as the UK and Middle East and increased in others
especially Africa and Central and Eastern Europe.
· for the first time since Q2 2018 the US orders index increased, an encouraging pointer to US growth early in 2020
Michael Taylor, chief economist at ACCA said of the global results: ‘Last year the global economy expanded at close to 3%, the slowest rate since the financial crisis ten years ago. The GECS foreshadowed this slowdown which continued steadily throughout last year. Looking ahead the GECS points to steady growth early in 2020, with no strong pick up but no global recession either.
Taylor continued: ‘Many risks to the global economy in 2020 are the same as in 2019, including trade tensions between the US and China, which were a major cause of slowing global growth. Recent developments in this area have been positive, but risks of a re-escalation with renewed tariff increases remain. The Middle East is the current focus of geopolitical risk although the potential for conflict here to hurt the global economy through a surge in oil prices is much reduced.’
Raef Lawson, Ph.D., CMA, CPA, IMA vice president of research and policy commented: ‘There are downside risks to the economy, the main one being a re-escalation of US-China trade tensions. But on the upside last year’s monetary easing by the US Federal Reserve and many other central banks will support growth in coming months. It is also of course a US presidential election year, which often coincides with a buoyant economy. To sum up, a global recession is very unlikely but it will be another year of sluggish growth.’
GECS Q4 2020 can be found online at: https://www.accaglobal.com/gb/en/professional-insights/global-economics/GECS_Q4_2020.html
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