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ACCA/IMA Global Survey of Accountants Points to China Slowdown;
July 18, 2012
Water & Wall Group
New York and Montvale, N.J., July 18, 2012 – The global economic recovery slowed down again in early 2012, according to a worldwide survey of finance professionals who fear that governments, already living beyond their means, may struggle to get back on track through extra public spending.
The Global Economic Conditions Survey (GECS) for the second quarter of 2012, undertaken by ACCA (the Association of Chartered Certified Accountants) and IMA® (the Institute of Management Accountants), cautioned that growth across the world's most developed economies stalled, again, and the global economy is fragile as it has been over the last three years. The global survey of 2,700 professional accountants suggests that hints of a stronger recovery were mostly down due to misplaced optimism, and most of the gains made during this time have since reversed.
China’s slowing economy dominated the survey findings, although, ACCA and IMA stress there are few signs of the hard landing many commentators feared. That said, both confidence and investment are falling despite increasing business opportunities. Survey editor Manos Schizas, senior economic analyst with ACCA, said: "The point now is to see how far and how fast the Chinese slowdown will travel. Our members in Africa tend to feel any fallout from Asia fairly quickly and there could be implications for other markets that trade with China."
U.S. business conditions are improving, but is macroeconomic trouble brewing?
According to the survey, the flip side of the Chinese slowdown is a recovery for the U.S. economy, where investment is on the rise and confidence is high, despite significant potential problems.
With growth faltering once again, the finance professionals surveyed are rethinking their attitudes towards public spending. Accountants working in major economic markets such as the U.S. - relied on by others for trade and export opportunities - believe that fiscal stimulus by their governments is already unsustainable. In only a few markets did respondents believe their governments could spend both robustly and sustainably – places such as Singapore, or the UAE.
"Finance professionals who responded to this survey were quite at ease with the prospect of austerity until mid-2010. Then the recovery failed to take off and everything changed. Relatively few believe their governments can make austerity work. There is a limit to what even countries with strong credit ratings and no liquidity constraints, such as the U.S. and China, can do," said Raef A. Lawson, Ph.D., CMA, CPA, IMA vice president of research.
In terms of business confidence and optimism, the U.S. appears to be pulling its weight in the global recovery, registering only marginal losses in the last quarter. Three out of ten respondents in the U.S., reported confidence gains in the last three months, while 31 percent reported losses. Similarly, U.S.-based respondents held on to some of their optimism about the global economy, with 43 percent saying they think the global recovery is still on track.
Regional divisions are becoming evident in the U.S. sample. In the Mid-Atlantic, Northeast and West, the last three quarters have seen a fairly consistent recovery in business confidence, while the Midwest and the South have seen a pattern similar to the broader global trend, with part of the confidence gains reversed in the second quarter. As a result, the West now leads the rest of the U.S. for business confidence.
ACCA and IMA believe that part of the reversal in the U.S. appears to have been due to respondents in the public sector – news of mounting job losses in the public sector in early 2012 may have weighed on sentiment at the time.
In terms of fundamentals, there was much to celebrate in the second quarter – respondents in the U.S. reported improved financing conditions, a thaw in the labor market, stable levels of capital spending, and more profitable business and investment opportunities arising. However, new orders appear to be falling, a trend which could prove to be a problem if it persists.
Finally, ACCA and IMA have asked their members to weigh in on fiscal policy in the U.S. 49 percent of respondents expect government spending to stabilize, however, the latest survey reported a small, but significant, shift in favor of austerity, with 81 percent of respondents saying that government spending must fall over the next five years. This continues a long and strengthening trend of U.S. respondents expressing concerns about the sustainability of fiscal policies.
For a copy of the full report, visit: http://www.accaglobal.com/content/dam/acca/global/PDF-technical/global-economy/tech-ms-gec14.pdf
ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance, and management. We support our 154,000 members and 432,000 students in 170 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. We work through a network of over 80 offices and centres and 8,400 Approved Employers worldwide, who provide high standards of employee learning and development. Through our public interest remit, we promote appropriate regulation of accounting and conduct relevant research to ensure accountancy continues to grow in reputation and influence. www.accaglobal.com.
About IMA® (Institute of Management Accountants)
IMA®, the association of accountants and financial professionals in business, is one of the largest and most respected associations focused exclusively on advancing the management accounting profession. Globally, IMA supports the profession through research, the CMA® (Certified Management Accountant) program, continuing education, networking, and advocacy of the highest ethical business practices. IMA has a global network of more than 65,000 members in 120 countries and 200 local chapter communities. IMA provides localized services through its offices in Montvale, N.J., USA; Zurich, Switzerland; Dubai, UAE; and Beijing, China. For more information about IMA, please visit www.imanet.org.
Editor’s Note: Survey findings for specific countries/regions are available upon request.
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