Accountants are gaining a bit more confidence in the global economy, especially in North America and Europe, but uncertainties linger, according to a new survey.
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The ACCA and IMA quarterly Global Economic Conditions Survey's Confidence Index was below its median reading for the period since 2012, and there wasn't much positive news from the other three economic indicators in terms of new orders, capital expenditures and employment.
Capex picked up marginally but is below the median of the same period, while new orders and employment showed a modest deterioration. On the other hand, accountants' attitudes don't appear to be consistent with fears of an outright global recession in 2023.
The two "fear" indices, which reflect respondents' concerns that customers and/or suppliers may go out of business, were little changed from the Q3 2022 survey, despite a sharp rise in borrowing costs and the prospect of negative corporate-earnings growth in 2023.
"What stands out is the improvement in confidence in both Western Europe and North America," said Jamie Lyon, head of skills, sectors and technology at ACCA, in a statement. "The swing in the former more than reverses the fall that we saw in Q3 2022, 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."
The survey results indicated that North American respondents may be less worried than they were about Ukraine, but the risk is that they could be underestimating the impact of the Federal Reserve's interest rate hikes on the U.S. economy in 2023.
"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," said Loreal Jiles, vice president of research and thought leadership at IMA, in a statement. "This is something of a surprise given the global rapid tightening of monetary policy by the world's central banks. ... 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."
