ACCA survey: Global decline in confidence

Cost pressures continue to ease, according to global accountants, but remain elevated by historical standards.

The ACCA and Institute of Management Accountants(IMA) Global Economic Conditions Survey (GECS) shows declining confidence among accountants globally for the third consecutive quarter in 2023, consistent with a further moderation in global growth. The survey doesn’t suggest that a major downturn is likely.

The survey recorded divergent changes in confidence at regional levels. Confidence rebounded sharply in North America after a large fall in the third quarter of 2023, and there were improvements in South Asia and the Middle East.

In contrast, confidence fell for the third consecutive quarter in Western Europe. It also declined materially in Asia Pacific, perhaps reflecting concerns about the state of China’s recovery. Meanwhile, confidence fell sharply in Africa, erasing the gains made earlier in 2023.

Fears among accountants that their customers or suppliers could go out of business don’t look alarming by historical standards. But with corporate bankruptcies rising and monetary policy tightening, working with a lag, it would be a surprise if there isn’t a rise in concerns in 2024.

According to the risks section of the survey, global accountancy professionals ranked economic risks, talent retention, and regulatory change as their top three risk priorities, respectively.

This compares with 12 months earlier, when regulatory change came first, followed by cybersecurity and economic risks.

ACCA chief economist Jonathan Ashworth said: "Concerns among accountants about increased costs eased slightly again in the latest quarter, but remain elevated by historical standards. This suggests that the risk is that financial market expectations may be too optimistic on the timing and magnitude of central bank rate cuts in 2024."

Geopolitics has also significantly moved up the ranks of risk priorities. Those in financial services tend to view geopolitical risks through the cyber security lens, while in the corporate sector, they perceive the threats more as "business-critical" risks, such as supply-chain disruption.

IMA senior director of research and thought leadership Susie Duong said: "The very large rise in North America puts confidence in the region close to its long-term average. This perhaps reflects increased confidence that the US Federal Reserve may be able to pull off a soft landing in 2024.

"However, the employment index fell sharply, together with a moderate decline in capital expenditure and new orders, suggesting that companies are cautious about expansion before it becomes obvious how the economy performs."