- Mainland China sees growing confidence
- Hong Kong calls for an increase in government spending
HONG KONG, May 4, 2012 /PRNewswire-Asia/ -- The latest edition of the Global Economic Conditions Survey, conducted by ACCA (the Association of Chartered Certified Accountants) and the Institute of Management Accountants (IMA), suggests that the global economy recovered substantially in early 2012 and regained some of the dynamism it had lost over the last year.
The global survey findings, representing the views of about 2,200 accounting professionals around the world, were welcomed by the two professional bodies: the share of respondents reporting confidence gains in their own organisations had nearly doubled from 16% in late 2011 to 29%, and while the majority (54%) still believed the global economy was deteriorating or stagnating, that figure was down from 73% in the previous quarter.
Emmanouil Schizas, editor of the ACCA/IMA Global Economic Conditions Survey, said of the global findings: "When all the results came in, we were a little sceptical and had to consider all of the likely objections first. Much of the rise in confidence is being reversed as we speak, as the relief factor subsides, but a lot of it is here to stay."
ACCA and IMA attribute much of the rise in global business confidence to objective improvements to the business environment, especially new orders, but also warn that relief is an important driver in the short term - especially due to the fact that a number of nightmare scenarios that had seemed likely in late 2011, such as an escalation of the European sovereign debt crisis or a hard landing in China, appeared more remote in the last quarter. There also appears to be a renewed faith in the prospects of the global economy and the strength of the recovery. These developments were also reflected in rising business investment and employment.
For Mainland China and Hong Kong, the last two quarters the survey findings have shown a different picture. Respondents in the Mainland have reported growing confidence, ahead of all others in the wider Asia-Pacific region, as well as very encouraging investment figures and the best employment figures of any major ACCA or IMA market. These are however combined with rapid inflation and concerns about government spending. Those in Hong Kong, on the other hand, have consistently reported lower confidence, and investment, underperforming the rest of the region, while also calling for an increase in government spending.
A return to global confidence?
Confidence gains were fairly consistent across regions and industries, although the Americas and Western Europe seemed to benefit the most in early 2012, as did manufacturers and distributors, particularly in the high-tech sectors.
The survey reports increasing business dynamism, mostly in the Americas and Asia-Pacific, with businesses securing new orders where previously they would not have and responding with increased investment and hiring. Across the Asia-Pacific region, 23% of respondents reported gains in business confidence (up from 11% in late 2011) against 44% who reported a loss of confidence (down from 53%). This is tied to an increased optimism about the global economy: 34% of respondents in the region felt it was improving or about to, up from 19% three months ago.
Despite all of these positive sentiments, and for the first time since the GEC surveys began, the Asia-Pacific region recorded lower confidence levels in Q1 2012 than any other part of the world, and only respondents in Europe were more pessimistic about the prospects of the global economy in general.
ACCA and IMA welcome this development, noting that investment has been subdued at the global level since the end of the 'green shoots' stage of the global recovery which lasted from mid-2009 to mid-2010. Africa is still the most confident of the seven major regions covered by the survey, but it is clearly losing ground.
ACCA and IMA believe that the bounce in investment is focusing on two kinds of opportunities in particular. Customer insights, namely the need to understand and benefit from spending decisions under new constraints, is one; the other is supply chain optimisation through deepening relationships and a stronger focus on quality.
The professional bodies also acknowledge the contribution of governments in their major markets, many of which showed signs of loosening their fiscal policies to boost a flagging recovery. It is not clear how much longer they can afford to do so, as respondents generally continue to believe that many major economies, including both the US and China, are likely to spend unsustainably in the medium term. On the other hand, finance professionals in Western Europe and other countries experiencing austerity also doubted the sustainability of their own governments' fiscal policies.
Emmanouil Schizas said: "It's too early to say whether the pattern of the modest recovery in 2012 is sustainable, but it seems to rely on a sustained recovery of demand in the West, supply in the East and confidence in sovereigns. It's a precarious balance."
Finally, ACCA and IMA note that the global economy's new-found dynamism has come at the price of rising input prices, and note that if even a timid recovery is accompanied by rising inflation, then a full-blown recovery, if and when it occurs, is likely to provide a challenge for central banks and other policymakers.
Find the full report here:
http://www.accaglobal.com/content/dam/acca/global/PDF-technical/global-economy/tech-ms-gec13.pdf
Notes to editors:
About ACCA
ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer 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. As the first global accountancy body entering into China, ACCA now has over 22,000 members and 41,000 students, with 7 offices in Beijing, Shanghai, Chengdu, Guangzhou, Shenzhen, Hong Kong SAR, and Macau SAR.
Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. We believe that accounting professionals bring value to economies in all stages of development. We aim to develop capacity in the profession and encourage the adoption of consistent global standards. Our values are aligned to the needs of employers in all sectors and we ensure that, through our qualifications, we prepare accountants for business. We work to open up the profession to people of all backgrounds and remove artificial barriers to entry, ensuring that our qualifications and their delivery meet the diverse needs of trainee professionals and their employers.
We support our 147,000 members and 424,000 students in 170 countries, helping them to develop successful careers in accounting and business, and equipping them with the skills required by employers. We work through a network of 83 offices and centres and more than 8,500 Approved Employers worldwide, who provide high standards of employee learning and development. Through our public interest remit, we promote the appropriate regulation of accounting. We also conduct relevant research to ensure that the reputation and influence of the accountancy profession continues to grow, proving its public value in society.
About IMA® (Institute of Management Accountants)
IMA®, the association for accountants and financial professionals in business, 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) program, continuing education, networking, and advocacy of the highest ethical business practices. IMA has a global network of more than 60,000 members in 120 countries and 200 local chapter communities. IMA provides localized services through its offices in Montvale, N.J., USA; Zurich, Switzerland; Dubai, UAE; and Beijing, China. For more information about IMA, please visit www.imanet.org.
