Economic confidence stalled in Q4 2020, experts say


Accountants and finance professional experts say economic confidence in 2020 Q4 has stalled and remains fragile heading into 2021, finds the latest ACCA and IMA Global Economic Conditions Survey (GECS).

Tracking confidence and fear indices, the global survey of more than 3,000 senior accountants and finance professionals reflects the outlook and experiences of the thousands of businesses they advise.

The 2020 Q4 findings reveal that:

•          Global orders, employment and capital investment indices recorded a further modest improvement – but still point to activity well below the pre-crisis level in 2019 Q4.

 The ‘fear’ indices – concern about customers and suppliers going out of business – edged lower in Q4 but remain elevated. This clearly underlines the extreme uncertainty in the global economic outlook at the start of 2021.

•          The confidence measure fell back in North America, having surged in the previous Q3. By contrast there was a big improvement in Middle East confidence, buoyed probably by continued recovery in oil prices.

•          Inflation concerns remain negligible with concern about costs staying close to an all-time low.

Outlook for 2021

Looking ahead, over 50% of respondents in Asia Pacific, North America and South Asia expect sustainable recovery in the second half of this year. The most optimistic in this respect is the Middle East, where 54% expect recovery during the first half of the year.

Michael Taylor, Chief Economist at ACCA says: ‘Last year was the worst for the global economy for several decades. 2021 will see recovery but precisely when and how strong it will be is very uncertain. We anticipate a weak start, followed by a recovery gathering momentum through the second half. Much depends on the evolution of the COVID virus and variants relative to the progress of vaccination programmes and there is great uncertainty surrounding these developments.

‘Since our polling in December, many countries have seen increased COVID-19 infection rates, prompting governments to re-impose restrictions including national lockdowns. This means that global economic prospects early in 2021 have deteriorated since the Q4 survey. At the same time there has been progress on the approval of vaccines, raising hopes of a permanent improvement in economic conditions later this year.’

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