New research has revealed Singapore businesses are substantially more confident in the first six months of the year and are reporting that pressures on cashflow and demand have eased. The findings emerged from the Global Economic Conditions Survey (GECS) from ACCA (the Association of Chartered Certified Accountants) and the Institute of Management Accountants (IMA).
GECS is the largest quarterly economic survey of accountants in the world, gauging the views of ACCA and IMA finance professionals working at the coal face of businesses.
The latest edition showed that while 52 percent of all respondents in Singapore reported a loss of confidence in the prospects of their organisations in the second half of 2012, only 38 percent did so in the first six months of 2013.
Finance professionals in Singapore are also becoming much more optimistic about macroeconomic developments, with 44 per cent hopeful for the global economic recovery in the first half of 2013, claiming that things were either getting better or about to do so. Only 19 per cent had felt this way in the second half of 2012.
“Across the globe the survey shows the highest level of optimism about the national and global economies in two years, and the strongest year-on-year improvement in three years," says Emmanouil Schizas, ACCA senior economic analyst and editor of the GECS. "The GECS findings are also pointing towards signs of recovery in Singapore. Singapore businesses have halted a year-long slide in capital spending and investment in staff and reported improved access to growth capital."
Schizas adds that despite continued positive news about the global and national economies, the GECS business confidence index has only just about inched in the right direction. After a surge in business confidence in Q1 that was perhaps a little premature, confidence levels are now in line with fundamentals.
“What is encouraging is that the marginal improvement in global business dynamism in early 2013 has now accelerated across all measures of investment, orders and employment. Employment in particular is recovering quickly and is now stronger than at any point in the last two years.”
Soo Yee Leong, head of ACCA Singapore, adds that quarter 2’s findings for Singapore suggest that the country is moving towards a more sustained recovery.
"Greater access to growth capital is certainly good news as is the boost to business investment in people and capital, but in the latter case there is a risk
that trend could reverse as external investment opportunities continue to outgrow opportunities for more organic growth," says Soo.
Respondents in Singapore have long expected government spending to rise substantially in the medium-term, but are now beginning to revise their expectations further upwards.
"A loosening of fiscal policy in the medium term is bound to have an impact on confidence and economic performance,” notes Soo.
The global picture
At the global level, the GECS found that both business confidence and optimism about the economy continued to rise during the second quarter of the year.
Nearly half of the GECS sample (47 percent) felt that the state of the economy was improving or about to do so, up from 43 percent in early 2013, while just under 50 percent were pessimistic, predicting deterioration or stagnation, down from 54 percent in the first quarter.
“This is the highest level of optimism about the national and global economies in two years, and the strongest year-on-year improvement in three years," says Schizas. "The survey showed there was improved availability of growth capital on a global scale in the second quarter of 2013, which was helping drive confidence upwards."
Schizas notes that fewer respondents reported falling revenues and declining orders. He adds that there has been little change in the share of respondents worried about customers or suppliers failing, despite the tightening of cashflow conditions.
The second quarter also saw businesses reporting more investment and business opportunities being available particularly through investment in new markets, niche offerings, and high quality standards.
Meanwhile, a two year high of more than 26 percent reported that their organisations had access to value-added opportunities and were not considering cost-cutting.