Unemployment expected to rise, despite small signs of promise in Covid-19 fightback

Accountancy experts 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 (Association of Chartered Certified Accountants) and IMA® (Institute of Management Accountants) 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

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.’       

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.

'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,'said Raef Lawson, Ph.D., CMA, CPA, IMA vice president of research and policy.

Looking ahead, Michael Taylor concludes: ‘Special COVID-19 related questions in this GECS show an overall 50-50 split between those expecting economic recovery this in the second half of this year and those not expecting this until 2021.

‘There may not be unity on when economic recovery is likely to take place, however a collective effort will be required to ensure a return to economic prosperity as quickly as possible.’

GECS Q2 2020 can be found online at: https://www.accaglobal.com/gb/en/professional-insights/global-economics/GECS_Q2_2020.html

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For more information on ACCA’s global coronavirus hub, featuring the latest news, research and advice to businesses and practitioners, visit https://www.accaglobal.com/gb/en/cam/coronavirus.html

About ACCA

ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants, offering 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.

ACCA supports its 219,000 members and 527,000 students (including affiliates) in 179 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 110 offices and centres and 7,571 Approved Employers worldwide, and 328 approved learning providers who provide high standards of learning and development.

Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence.

ACCA has introduced major innovations to its flagship qualification to ensure its members and future members continue to be the most valued, up to date and sought-after accountancy professionals globally.

Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. More information is here: www.accaglobal.com

About IMA® (Institute of Management Accountants)
IMA®, named the 2017 and 2018 Professional Body of the Year by The Accountant/International Accounting Bulletin, 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) and CSCA® (Certified in Strategy and Competitive Analysis) programs, continuing education, networking and advocacy of the highest ethical business practices. IMA has a global network of more than 125,000 members in 150 countries and 300 professional and student chapters. Headquartered in Montvale, N.J., USA, IMA provides localized services through its four global regions: The Americas, Asia/Pacific, Europe, and Middle East/India. For more information about IMA, please visit www.imanet.org.