Global economy subdued with weaknesses persisting, ACCA finds
The survey also found that the two GECS ‘Fear’ indices, which reflect respondents’ concerns that customers and/or suppliers may go out of business, has remain almost unchanged from the 2022 Q3
The global economy remains weak but shows signs of steadying, according to the The Q4 Global Economic Conditions Survey (GECS) from the ACCA and IMA.
The associations found that despite this the GECS Confidence Index bounced slightly for the second consecutive quarter, perhaps reflecting hopes that the worst of the central bank tightening might soon be over and that China might successfully relax its zero-Covid restrictions.
Even so, it found that the Confidence Index remains below its median reading for the period since 2012. In addition, CapEx picked up marginally but remained below the median of the same period; new orders and employment showed a further modest deterioration.
Taken as a whole, the ACCA said the results are consistent with a “subdued macro-economic outlook” but that they do not appear yet to be at levels consistent with an outright global recession in 2023 – even though this is the base case scenario for many economic forecasters.
The survey also found that the two GECS ‘Fear’ indices, which reflect respondents’ concerns that customers and/or suppliers may go out of business, has remain almost unchanged from the 2022 Q3 survey, despite the sharp rise in borrowing costs and the prospect of negative corporate-earnings growth in 2023.
Jamie Lyon, head of skills, sectors and technology at ACCA, said: “What stands out is the improvement in confidence in both Western Europe and North America. The swing in the former more than reverses the fall that we saw in 2022 Q3, when worries about the impact of higher energy prices were at their most intense.
“The improvement in confidence probably reflects hopes that the Russia–Ukraine conflict can be contained, and that there will be sufficient natural gas to see Europe through what now looks increasingly likely to be a mild winter. Looking to the rest of the world and emerging markets however, 2023 could still prove to be a challenging time.’”
Loreal Jiles, vice president of research and thought leadership at IMA, added: “Global confidence has edged up for the second consecutive quarter as cost concerns have eased and with worries about accessing finance and securing prompt payment having not gotten any worse.
“This is something of a surprise given the global rapid tightening of monetary policy by the world’s central banks. The past 12 months have seen the most aggressive tightening of policy in more than 40 years, in pace, scale and breadth. It is strange that this has not yet had a material impact on financing conditions and corporate cash flows. But monetary policy works with long and variable lags, which suggests that this may become more of a problem later in 2023.”
