Accountants, finance professionals report improved global economy in Q2

Professional accountants and finance professionals around the world have reported a buoyant return to economic stability in the second quarter (Q2) of 2021, the latest edition of Association of Chartered Certified Accountant (ACCA) and IMA’s Global Economic Confidence Survey (GECS) revealed.

The highlight of the ACCA report, which was contained in a statement obtained by our correspondent, showed that confidence remains very high, despite a marginal decline from the first quarter (Q1

According to the report, globally, the two ‘fear’ indices – measured by concerns that customers and suppliers may go out of business, both declined in this latest survey, confirming that the extreme uncertainty created by the COVID-19 crisis has fallen back towards more normal levels.

However, despite this optimism, stark warning signs remain due to wide regional variations in confidence, with large increases across Europe, contrasting with significant falls in Asia Pacific and South Asia. As a result, ACCA and IMA ask governments and policymakers to ensure this divergence does not grow.

Commenting, Chief Economist ACCA, Michael Taylor says: ‘These changes reflect the speed at which vaccinations are taking place in Europe while increased COVID-19 infections are happening again in Asia Pacific and South Asia. A key theme of this GECS is the divergence in economic prospects between advanced and emerging market economies. This needs to be tackled urgently.’

Also, the Chief Executive of ACCA, Helen Brand adds: ‘the world economy’s recovery to its pre-pandemic size has been driven by rapid growth in the US and China, the two biggest economies. There are many jurisdictions with plenty of ground to still make up. But the difference we see between advanced and emerging markets is glaring – and action is needed on vaccines so that there are no shortages in emerging economies.’

Painting the picture for Africa, the report stated that confidence edged slightly lower in Q2 across Africa, taking a slight dip from its Q1 high of 25.6 to 23.8. This may be attributable to rising COVID infections, raising fears of restrictions that would hurt domestic activity.

“ Orders recovered but only slightly and Africa has not witnessed the rebound in activity indicators seen elsewhere in this GECS. A third wave of COVID infections is now underway while there has been negligible progress on vaccinations. Health and fiscal resources are in many cases more stretched than in previous COVID waves. There will be no strong recovery in many African countries. Only commodity exporters may see economic recovery, as prices and demand rebound”, it stated.

Commenting on this, Head of ACCA Nigeria, Thomas Isibor said, ‘Looking ahead, health and economic risks are considerable, especially if a vaccine-resistant variant emerges and spreads, forcing renewed lockdown measures with consequent economic harm. On the global and national level, policy-wise it’s important that fiscal support is not withdrawn prematurely, potentially causing a setback to recovery in private demand.’

On global confidence, the report revealed that, “This fell back in North America, but this came after a very large jump in the Q1 survey. Advanced economies are now recovering, benefitting from rapid progress on vaccinations and the spending of accumulated savings.

It, therefore, added that “In Western Europe orders saw a jump, pointing to economic recovery gathering momentum in the second half of the year. Asia Pacific also reported increased orders, boosted by export demand. Elsewhere there was little change, apart from in South Asia where renewed lockdown measures have affected the economic outlook in the near term.

On economic recovery, the report noted that the majority of respondents in North America said that economic recovery is already underway. By contrast, over half of respondents in Africa and South Asia do not expect recovery until 2022 at the earliest. Surprisingly this was also the case in Asia Pacific. In Western Europe the proportion expecting a much-delayed economic recovery has fallen by 10 percentage points between the Q1 and Q2 survey, underlining the recent improvement in the economic outlook in the region.

Consequently, the GECS report shows respondents across regions expect a modest increase in inflation over the next five years.

“Compared to Q1 there has been a marked increase in inflation expectations in North America, while in Western Europe expectations are for a modest increase in inflation. The consensus across all regions is that inflation will rise modestly, by up to three percentage points in coming years”, it stated.