Global business is too easily knocked off course by short-term economic crises, such as the current US debt crisis, according to a global survey of finance and business leaders who hold the Chartered Global Management Accountant (CGMA) designation.
The Chartered Institute of Management Accountants (CIMA) and the American Institute of CPAs (AICPA) surveyed over 1,300 members for their perspectives on how economic crises affect long-term business planning.
The survey finds that only 31% of respondents believe the ongoing US debt crisis will ultimately push the global economy towards recession. Despite this more than half (53%) expect higher US interest rates and 70% anticipate a weaker dollar.
Sixty percent of respondents said that business is too sensitive to economic crises, while 57% agreed that their organisation must seek new ways to be resilient and less susceptible to macro-economic volatility.
“There will always be another US debt crisis, Arab Spring or Eurozone disaster just around the corner," says Charles Tilley FCMA, CGMA, Chief Executive of CIMA. "This uncertainty simply cannot drive business strategy."
Tilley adds that these ‘grey swans’, as some business commentators have termed them, are prompting organisations to cut spending and investment at a time when innovation is absolutely vital to our economic health.
"Indeed the seizing of opportunities is key to long-term survival and so we must all plot a suitable course between risk and innovation, managing the approach and mitigations put in place to address these uncertainties.”
According to Barry Melancon CPA, CGMA, Chief Executive Officer of AICPA, the repercussions of US debt ceiling and spending decisions will reverberate across the global economy and may touch many of the world’s businesses.
"Management accountants are bracing for short and long-term implications, even as they look for ways to make their businesses less vulnerable to the pulses of geo-political forces," says Melancon.