Global economic confidence declined for the third consecutive quarter in Q4 2018 and now stands at an all-time low, according to the latest Global Economic Conditions Survey (GECS) from IMA® (Institute of Management Accountants) and ACCA (the Association of Chartered Certified Accountants).

GECS is the largest regular economic survey of accountants around the world, in terms of both the number of respondents and the range of economic variables it monitors. You can read the full report here.

Among the key findings of the Q4 2018 report:
  • There are signs of growth beginning to weaken in the world’s three biggest economies: the U.S., China, and the Eurozone. The global orders balance, however, was little changed in Q4 and remains consistent with reasonable overall expansion in the global economy in the first half of 2019.
  • All key regions recorded a negative confidence score—there were more people pessimistic about the outlook than optimistic—with the lowest score being recorded in Western Europe and the Caribbean.
  • The most confident—or rather least pessimistic—part of the global economy was again South Asia, followed by Africa and North America.
  • Reflecting this less-upbeat outlook, 47% of survey respondents globally are considering laying off staff, with just 18% considering taking on new workers. Meanwhile, 39% of respondents are considering scaling back investment in new capital projects, compared with just 16% who are looking to increase investment in new projects.
Higher mortgage interest rates are cooling house building activity, for example. But the jobs market remains extremely buoyant which will underpin robust consumer spending in the coming months. Despite falling in Q4, the GECS orders balance for the U.S. is still consistent with annualized gross domestic product (GDP) growth of around 2.5% in the first half of 2019.

Raef Lawson, Ph.D., CMA, CSCA, CPA, IMA vice president of research and policy, said, “The waning impact of last year’s fiscal stimulus in the U.S., combined with higher interest rates, will moderate growth this year – after near 3% expansion in 2018.

“There is no sign yet of a softening in the extremely buoyant labor market. So, while the Federal Reserve may limit further interest rate increases this year, an easing of monetary policy is highly unlikely. But there are concerns further out with a risk of below-trend growth in 2020 that would trigger easier monetary policy.”

Trade tensions remain a downside risk, notwithstanding the truce and current negotiations with China. Even at maximum level, U.S. tariffs on Chinese imports will have a modest direct effect on the U.S. economy.

Except for government spending, all the major sub-components fell, including a sharp drop in capital expenditure and a slight decline in employment, reflecting the health of the country’s jobs market.

Fieldwork for the Q4 2018 GECS took place between November 23, 2018, and December 7, 2018, and attracted 3,773 responses from IMA and ACCA members around the world, including 302 CFOs.

For more information on the global economic conditions surveys, visit IMA's website.