Accountants, finance professionals: Global economic confidence dips in Q42021

KARACHI: The latest results from a regular global survey of accountants and finance professionals views about the global economy reveals their economic confidence fell by 12 points in the fourth quarter of 2021, due to the rapid spread of the Omicron variant of the Covid-19 strain.

Conducted during late November and early December 2021 at the start of the outbreak, the ACCA (the Association of Chartered Certified Accountants) and IMA® (Institute of Management Accountants) Global Economic Conditions Survey (GECS) shows that global orders were little changed in Q4, up just one point, signalling that growth will continue at a steady pace early in 2022.

Other key activity indicators remain relatively little changed with the capital expenditure index up one point and employment index down by six points compared to Q3 results.

GECS’ fear indices, which track concern about suppliers and customers going out of business, were also little changed in Q4 but are above pre-pandemic levels.

Michael Taylor, ACCA’s chief economist said: ‘Accountants are often the first to sense the impact of economic activity, informed by the work they do on a daily basis sustaining economies and from the feedback from their clients, especially in the small business sector. GECS reveals their concerns about costs increasing again, seeing this measure double over the course of 2021 indicating growing inflationary pressures in many markets around the world.’

Looking at specific jurisdictions, confidence fell the most in Western Europe by 28 points, which was the first region to see the rapid spread of Omicron. Confidence increased modestly in two regions – Asia Pacific by five points and North America by 10 points. Only the Middle East recorded a fall in the orders index of six points, with South Asia showing the biggest increase at +8 points.

The biggest economic risk this year is that inflation, already elevated, stays higher for longer, partly because of prolonged supply shortages. Upside surprises to inflation would trigger a greater degree of monetary tightening than is currently discounted by financial markets. The effect would be to slow global economic growth, preventing a return to its pre-pandemic trend.

Copyright Business Recorder, 2022