New ACCA and IMA Report: Global Confidence at a 3 1/2-Year High, Despite Fears of Ongoing Business Closures Worldwide

The latest Global Economic Conditions Survey (GECS) released today from ACCA (the Association of Chartered Certified Accountants) and IMA® (Institute of Management Accountants) found that global confidence improved significantly during the third quarter of 2020 amid persistent fears of a prolonged economic recession due to the worldwide coronavirus pandemic

The GECS 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 captured the true scale of the global recession caused by the response to the coronavirus pandemic The full report is available here and at https://wwwimanetorg/insights-and-trends/global-economic-conditions-survey?ssopc=1

The Q3 2020 survey which features specific COVID-19-related questions points to global recovery through the second half of 2020 after the unprecedented collapse in activity during the first half But while there may be some economic expansion late this year the survey revealed increasing expectations that significant economic recovery will be pushed into 2021 

Activity indicators covering orders capital spending and employment all bounced back to some degree from low points reached in the second quarter survey The global orders balance recovered by nine points in the third quarter signalling a modest turnround Other measures including concern that customers and suppliers may go out of business also improved slightly from extreme levels last time

The nature and prolonged duration of the COVID-19 shock means that it is likely to result in permanent changes to the structure and potential growth rates of economies said Raef Lawson PhD CMA CPA IMA vice president of research and policy Higher private sector savings may be one outcome: households and companies limit consumption and investment respectively as they remain cautious in the face of extreme uncertainty This suggests that the public sector may have to run significant fiscal deficits for some time in order to support overall demand For now at least mounting public sector debt can be sustained since interest rates are exceptionally low          

The momentum of the current recovery is likely to fade towards the end of the year and into 2021 More generally the continued prevalence of the virus means that social distancing rules and other containment measures will persist for the foreseeable future said Warner Johnston Head of ACCA USA This will adversely affect consumer demand in particular areas Most economic shocks do not result in permanent changes in economic behavior But the COVID-19 shock is likely to be different: it already has lasted for the first three quarters of 2020 and will do so well into 2021 This and the nature and scale of the economic impact means that permanent changes to the structure of economies are inevitable

The report found that confidence in the third quarter recovered strongly to a 3 1/2-year high as the deep gloom caused by lockdowns lifted in most regions; North America is the most optimistic while South Asia has the greatest proportion of respondents not expecting recovery until next year

In North America the report found that the orders balance recovered significantly in the third quarter but with the exception of previous quarter is at a record low level Additionally the increase in confidence this quarter was the largest quarter-to-quarter increase in the history of the survey reflecting the transformation in the economic outlook between June and September

Overall the North American region is consistent with a reasonably strong recovery in the second half of the year As expected the March to June quarter witnessed some record quarterly falls in Gross Domestic Product (GDP) including 91% in the United States The current forecast for quarter on quarter GDP in the third quarter is around 7% in the United States

Further expectations of substantial economic recovery have shifted decisively towards later in 2021 over the last three months including above 50 percent in North America Responses to this question highlight the realization that the economic damage caused by COVID-19 and associated restrictions will persist well into 2021

Additionally the survey identified a clear regional pattern with the strongest access to finance in the developed markets of North America and Europe and the weakest in Emerging Markets This did not change between the June and September surveys

Fieldwork for the Q3 2020 GECS took place between August 25 and September 8 2020 and attracted responses from 1067 ACCA and IMA members around the world including more than 100 CFOs The COVID-19 questions elicited 789 responses

About ACCA
ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants offering business-relevant first-choice qualifications to people of application ability and ambition around the world who seek a rewarding career in accountancy finance and management

ACCA supports its 227000 members and 544000 students (including affiliates) in 176 countries helping them to develop successful careers in accounting and business with the skills required by employers ACCA works through a network of 110 offices and centres and 7571 Approved Employers worldwide and 328 approved learning providers who provide high standards of learning and development Through its public interest remit ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence

ACCA has introduced major innovations to its flagship qualification to ensure its members and future members continue to be the most valued up to date and sought-after accountancy professionals globally Founded in 1904 ACCA has consistently held unique core values: opportunity diversity innovation integrity and accountability More information is here: wwwaccaglobalcom

About IMA® (Institute of Management Accountants)
IMA® named the 2017 and 2018 Professional Body of the Year by The Accountant/International Accounting Bulletin is one of the largest and most respected associations focused exclusively on advancing the management accounting profession Globally IMA supports the profession through research the CMA® (Certified Management Accountant) and CSCA® (Certified in Strategy and Competitive Analysis) programs continuing education networking and advocacy of the highest ethical business practices IMA has a global network of more than 125000 members in 150 countries and 300 professional and student chapters Headquartered in Montvale NJ USA IMA provides localized services through its four global regions: The Americas Asia/Pacific Europe and Middle East/India For more information about IMA please visit wwwimanetorg

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