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Panic is no longer a major driver of the global economy

Economic recovery should be possible within the next 18 months, according to a global survey of finance professionals by ACCA (the Association of Chartered Certified Accountants).

Optimism continued to depend substantially on the actions of national governments, but the reliance on state assistance has dissipated since the Q1 survey and business confidence is now more clearly linked to expectations of future growth. According to ACCA, these are tentative signs that panic is no longer a major driver of the global economy.

The ACCA Global Economic Conditions Survey for the second quarter of 2009 indicates that the loss of business confidence has slowed substantially, coming to a halt in key areas such as the Asia Pacific region and even reversing in key sectors such as small and medium sized enterprises and large financial services firms.

Sixty-four per cent of the finance professionals surveyed said they thought the global economy had bottomed out, twice as many who responded in the first quarter of 2009. More than a third of respondents now expect a recovery within the next 12 months.

However, one in ten still expect the downturn to last three years or longer, and this view is twice as common among public sector accounting professionals.

On a regional basis, Western European finance professionals were more pessimistic about the recovery, while African professionals were most likely to believe conditions were improving, albeit weakly. Respondents from Asia Pacific were more likely to think the worst was behind them and were expecting a speedier recovery. 

Despite this largely positive shift in perceptions, the survey of 546 ACCA members in 77 countries shows that trading conditions improved only marginally in the three months to May 2009. Nearly two thirds (68%) saw revenues fall in their organisation or for their clients and 62% witnessed staff cuts and hiring freezes.

There are other areas of concern – more businesses reported problems securing prompt payment. Fewer respondents now expect their organisation's income to fall in the next quarter, these still outnumber those expecting an increase in income by more than two to one (42% against 18%).

Finally, the latest survey asked finance professionals to predict what the global economy would look like following the credit crunch. Respondents offered the following:
• Stricter and more pervasive regulation, especially of financial institutions
• Tighter credit conditions
• Increased efficiency, as organisations look inward for cost savings and more efficient ways of doing business
• Stronger governance and internal business controls
• Consumers expected to become cautious net savers

Dr Steve Priddy, ACCA's Director of Technical Policy and Research, said: "While there is little evidence of economic recovery, there is renewed confidence and optimism. Our next quarterly survey will look for real changes in trading conditions which support that viewpoint and whether the private sector is backing its confidence by investing in people and capital – or whether public sector finance professionals are right to think that the global economy has some way to go before recovery begins."

Download the Global Economic Conditions Survey Report: Q2, 2009