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January 24, 2017

An age of uncertainty, reveals IMA and ACCA survey

By Stephanie Wix

Economic confidence in the fourth quarter of 2016 has dipped globally except in the USA, according to the 2016 Global Economic Conditions Survey (GECS) by ACCA and the Institute of Management Accountants (IMA).

Of the 4,500 respondents, 43% admitted that they had become less confidence over the past three months, with only 23% becoming more confident.

Issues affecting confidence included the fall of government investment, concerns over Brexit, the upcoming European Elections, the political landscape in the USA and its trade developments with China. The Eurozone has hit its lowest confidence levels since 2012.

Faye Chua, head of business insights at ACCA, said: “Current political uncertainty is clearly having an impact on global business confidence. In Europe, uncertainty over the outcome of elections in the Netherlands, France and Germany could lead to major policy shifts for regional trade and the future direction of the Eurozone.”

A key reason for the confidence drop may be the reported fall in the government spending, displaying the “austerity mode” of markets. Companies share a concern with 44% citing government spending as a main worry. Also, the “volatile” exchange rate is high on the list of concerns.

The decline in overall confidence is also due to weaker prospects in both OECD and non-OECD economies. Confidence fell in China, Western Europe and the UK, and rose only slightly in the USA.

Raef Lawson, vice president of research and policy, IMA said: “There is a real sense that USA companies are optimistic about their short-term prospects, with confidence in part due to lowered unemployment rates and the growing expectation of infrastructure spending and tax cuts.”

The regions that rated declining incomes as their biggest concerns were the Middle East, Africa, and Latin America – all of which that have been in recession or seen growth hit record multi-year lows.

Chua added: “A strengthening USA dollar could have significant impacts for trade-dependent economies such as Taiwan, Hong Kong, Singapore and Vietnam as well as impact on capital investments for emerging markets. Yet we are unlikely to see a repeat of the crises of the 1990s, our findings highlight that 2017 could mark a new Age of Uncertainty for the global economy.”

Chua concluded: On a positive note, some of the underlying strengths of OECD and non-OECD economies suggest growth can be maintained and even improved over the next few years.”

Those surveyed were members of the ACCA (Association of Chartered Certified Accountants), and members of the IMA (Institute of Management Accountants), including business leaders and finance professionals. The survey took place between 24th November and 13th December 2016. 

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