ACCA's latest survey: 'Fragile economic confidence due to geopolitics'

Geopolitics tops accountants' global risk priorities for the first time as indicated by the results of the ACCA and IMA quarterly Global Economic Conditions Survey (GECS).

The latest GECS report shows improving global confidence in the second quarter of 2025, with the index reaching its highest level since the third quarter of 2024.

That said, confidence among accountants is still at a low level by historical standards.

For the first time, geopolitics topped accountants' global risk priorities.

Economic fears are tied to regulatory and compliance risks as the second-highest risk priority.

Talent scarcity and cybersecurity remain critical but were slightly less prominent this quarter.

Climate change, fraud and supply chain risks remained lower down the agenda for respondents, suggesting a renewed focus on macro-external volatility, with boards and executives reacting to intensifying global conflicts, regulatory unpredictability and economic pressure.

Of the major regions, confidence in North America rose in the second quarter, amid some improvement in sentiment among US-based accountants, but it remains depressed by historical standards.

Western Europe saw another moderate gain in confidence, aided by a further improvement in the UK from its record low in the last quarter of 2024.

By contrast, confidence fell sharply in the Asia Pacific, erasing the gains made in the first quarter of 2025.

The deterioration in the backdrop for global trade, amid major changes in US trade policy, was likely the key factor weighing on sentiment.

"Global growth has generally proved quite resilient in the first half of 2025, despite the large increases in US tariffs and massive rise in uncertainty," said Jonathan Ashworth, chief economist, ACCA.

"While the key GECS indicators are certainly not pointing to a global economy in rude health, with confidence in particular remaining low, neither are they suggesting that a major downswing is imminent. Nevertheless, with higher tariffs likely to push US inflation higher over the coming months, and as uncertainty and tariffs weigh on the US and global economies, some slowing in global growth looks likely over the second half of 2025."

The global new orders and capital expenditure indices both declined modestly, although the former is at its historical average and the latter not much below.

Both are at levels broadly similar to other readings since the aftermath of Russia’s invasion of Ukraine.

Meanwhile, the employment index improved and is not that far below its historical average.

Alain Mulder, senior director, Europe operations and global special projects at IMA, said, "According to accountants, global cost pressures eased, although there are divergent regional pressures.

"The proportion of North American respondents reporting increased operating costs eased slightly, although it remains on the high side historically after the large increase in Q1.

"This raises the risk that firms may attempt to raise prices over the coming months.

"Rising inflation would complicate the task of the Federal Reserve, if slowing growth and an easing jobs market begin to increase the need for a loosening in monetary policy."