Economic confidence among accountants and finance professionals in North America grew in the second quarter of the year, but declined in other parts of the world, according to a survey released Tuesday.
The quarterly
"The survey results aligned with my sense of how things are developing in the global economy, with some loss in momentum through Q2," said ACCA chief economist Jonathan Ashworth in a statement. "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 European Central Bank and the Bank of England might want to tread carefully with monetary tightening. In contrast, the U.S. economy is looking pretty resilient, suggesting the Fed may be able to carry off the much-talked-about soft landing."
Sentiment at the global level stayed around its long-term average in terms of new orders, capital expenditures and employment, but the steady improvement in global confidence stalled in Q2. Both of the "fear indices," in terms of concerns that customers and suppliers could go out of business, continued to improve, suggesting little worry about the impact of higher interest rates, recession risks or the growing number of bankruptcies.
"Looking at the change in the GECS Confidence Indices over the year, one notable factor is the resilience of North America," said IMA director of research Susie Duong in a statement. "With stronger-than-expected growth of the U.S. economy in 2023 Q2, it suggests that an imminent recession for the U.S. 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."
While global economic confidence appears to have stalled in the second quarter, according to the report, it remains much higher than a year ago. Confidence had been increasing as companies came to terms with the fallout from the Russia–Ukraine conflict and as hopes rose that a faster-than-expected relaxation of China's zero-COVID policies would kickstart the global economy. But that optimism did not translate into stronger numbers for new orders, which are now lower than a year ago, indicating a broader loss of momentum.
The report also found a worrisome pullback in the employment and capital spending indices in Q2. The declines were modest and don't amount to a major deterioration in the global economic outlook; however, after over a year of aggressive monetary tightening and interest rate hikes by many central banks like the Federal Reserve, that policy shift could have a material dampening effect on economic activity in the second half of this year.
