The latest Global Economic Conditions Survey (GECS) from the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA) indicates a decline in confidence among accountants and finance professionals globally for the third consecutive quarter. However, it does not suggest a major economic downturn is imminent.
This survey, conducted quarterly, is the largest economic survey of accountants worldwide, providing a comprehensive analysis of economic variables and the views of finance professionals. This quarter’s data reveals a mix of regional trends, with North America experiencing a significant rise in confidence, while Western Europe, Asia-Pacific, and Africa witnessed a decline.
Overview of the Global Economic Outlook
North America: A strong rebound in confidence
North America saw a substantial increase in confidence, bringing it close to its long-term average. This rise in confidence can be attributed to increased optimism regarding the ability of the US Federal Reserve to achieve a soft landing in 2024. Despite concerns about tightening monetary policy, North American respondents have shown resilience.
Western Europe and APAC: Declining confidence
In contrast, both Western Europe and Asia-Pacific experienced a decline in confidence in Q4 2023. Confidence in these regions is below average, reflecting concerns about the economic outlook and the recovery in China. The decline in confidence in Western Europe is particularly noteworthy, as it reverses the improvement seen in the previous quarter.
Africa: Sharp fall in confidence
The survey reveals a sharp fall in confidence in Africa, erasing the gains made earlier in 2023. This decline may indicate challenges faced by the region, impacting economic growth and stability.
Economic risks
According to the GECS survey, global accountancy professionals ranked economic risks, talent retention, and regulatory change as their top three risk priorities. This marks a shift from the previous year when regulatory change, cybersecurity, and economic risks topped the list. Geopolitics has also moved up the ranks of risk priorities, highlighting the increasing concerns surrounding global political dynamics.
Financial Services vs. Corporate Sector
The survey reveals that those in the financial services sector tend to view geopolitical risks through the lens of cybersecurity, while the corporate sector perceives the threats more as ‘business-critical’ risks, such as supply chain disruption. This divergence in perspectives reflects the varying priorities and challenges faced by different sectors.
Cost pressures and Central Bank rate cuts
The GECS report indicates that concerns among accountants about increased costs have eased slightly. However, these concerns remain elevated by historical standards. This suggests that financial market expectations may be too optimistic regarding the timing and magnitude of central bank rate cuts in 2024.
The overall findings of the GECS survey are consistent with a further slowing of the global economy. While a major downturn is not expected, there are risks and challenges that need to be monitored. The divergent regional trends and the shifting priorities in risk assessment highlight the complex and interconnected nature of the global economy.