ACCA and IMA Report Biggest Increase Ever in Economic Confidence: Global Economy Survey in Q1 2021
Delhi: A new Global Economic Conditions Survey (GECS) of 2021 Q1 by ACCA (the Association of Chartered Certified Accountants) and IMA® (Institute of Management Accountants) found the largest jump in global confidence in the last decade, with the most positive results emerging from North America.
The GECS, the largest regular economic survey of more than 1,000 senior accountants and finance professionals from around the world, has consistently captured the true scale of the global recession caused by the coronavirus pandemic, tracking the drop in confidence since the beginning and a new outlook in confidence triggered by the combined effects of vaccines and the fiscal stimulus.
You can read the full report here or at: https://www.imanet.org/insights-and-trends/global-economic-conditions-survey?ssopc=1.
The Q1 2021 GECS has recorded the biggest jump in global confidence since the survey began 10 years ago. The GECS also shows a significant improvement between the 2020 Q4 survey conducted last December and the 2021 Q1 survey in March.
The authors note that the regulatory approval of several highly effective vaccines against COVID-19 and the subsequent introduction of vaccination plans in many countries has put a permanent solution to the health crisis within reach. Activity indicators covering orders, capital spending, and employment all increased to some degree in the first quarter of this year – closely mirroring the level of confidence in the last quarter of 2019 before the pandemic struck.
Hanadi Khalife, senior director of MEA & India operations at IMA®, said, “The Q1 GECS report paints a much brighter picture than its immediate predecessor, with confidence rising by the most in the history of the survey. The approval and deployment of several effective vaccines has dramatically improved the prospects of an end to the COVID crisis. The findings paint a hopeful picture for further recovery in the global economy into the second half of 2021.”
“Having suffered the biggest recession for several decades in 2020, the global economy is on course for a relatively quick rebound,” said Michael Taylor, Chief Economist at ACCA. “The good news is that vaccination plans with continued policy support are on course to lift the global economy out of the COVID abyss this year.”
Raef Lawson, Ph.D., CMA, CPA, IMA vice president of research and policy, noted that the current path to global economic recovery differs from the financial crisis of 2007 to 2009, which resulted in a long period of subdued growth as private sector balance sheets were rebuilt through increased savings.
Said Lawson, “This crisis is different as its root cause is health and not economic. India is witnessing its second wave, so risks still remain significant. But the ongoing government support provided to both households and enterprise over the last year leaves both well-placed to resume spending once the health crisis is over. Expanding the age bracket to allow for more vaccinations could help to reduce or do-away with lockdowns as a means to control the spread of COVID-19, thereby allowing economic activity and growth to return back to normal.”
He further added, “This crisis is different as its root cause is health and not economy. For now, global COVID-19 infections are high relative to vaccination rates, so risks remain significant. But activity indicators, such as orders, showed a strong relative increase for the Middle East and Africa region. There are likely to be permanent changes in the pattern of spending as one of the many long-term economic consequences of the COVID crisis.”
The 2021 Q1 findings also reveal that overall confidence and orders have improved in all regions, with the exception of Africa. The “fear” indices – concern about customers and suppliers going out of business – showed mixed results in this survey but both remain above long run averages, underlining continued heightened uncertainty. Additionally, near-term cost concerns showed an increase, reflecting higher commodity prices and other costs as the global economy recovers.
Noting the concern about higher sustained inflation, Taylor further added, “Amid lockdowns, a collapse of global demand and a drop in commodity prices, inflation plummeted towards zero in many advanced economies and was subdued elsewhere. But as the post-pandemic world begins to take shape, there is now a debate about whether inflation is set to move higher, both over the short and medium term. In the near-term, we expect rising costs will lift inflation rates back towards 2% in many cases.”
Fieldwork for the 2021 Q1 survey took place between February 26 and March 11, 2021 and attracted 1,004 responses from ACCA and IMA members, including over 100 CFOs.