Rebound in confidence stalls amongst finance leaders, ACCA finds

A sharp rebound in confidence in the aftermath of Russia’s invasion of Ukraine has ended, according to a new global survey of accountants and CFOs conducted by ACCA and IMA.

The survey suggested that ongoing aggressive interest rate hikes and China’s weaker than expected economic recovery have “likely weighed on confidence, offsetting any benefit from receding fears of a global banking crisis and falling inflation”. 

ACCA assured that there was no evidence a global recession is set to happen however, adding that sentiment at the global level remains around its long-term average.

It also noted it was “somewhat surprising” that aggressive monetary tightening has not had a material impact on the GECS ‘Fear’ indices, which reflect respondents’ concerns that customers and/or suppliers may go out of business. Both these indices continue to improve, suggesting “little concern” about the impact of higher interest rates, recession risks, or the growing number of bankruptcies. 

However, it did warn that this could be the “calm before the storm”, and noted indices measuring global problems accessing finance and securing prompt payment both fell in the second quarter, although “neither looks particularly worrying yet by historical standards”. 

Meanwhile, the percentage of global respondents concerned about increased costs also fell slightly again, although it remains “very elevated” by historical standards, “suggesting that central banks may have more work to do”. 

Jonathan Ashworth, chief economist at ACCA, said: “The survey aligned with my sense of how things are developing in the global economy, with some loss in momentum through 2Q. Things don’t look particularly alarming though, and a global recession does not look imminent. By region, things aren’t looking that great in Asia-Pacific and Western Europe. 

“Chinese policymakers may need to increase policy stimulus, while the ECB and BoE might want to tread carefully with monetary tightening. In contrast, the US economy is looking pretty resilient, suggesting the Fed may be able to carry off the much talked about soft landing.” 

Dr. Susie Duong, director of Research at IMA, added: “Looking at the change in the GECS Confidence Indices over the year, one notable factor is the resilience of North America. With a stronger than expected growth of the US economy in 2023 Q2, it suggests that an imminent recession for the US does not seem likely this year, although Asia and Europe could increasingly become a drag if growth decelerates significantly there. 

“The robustness of the global ‘fear’ indices is also unexpected. However, it’s less clear that will still be the case at the turn of the year.”