ACCA's latest Global Economic Conditions survey of finance professionals has found that the fragile global recovery has gone into reverse in the third quarter of 2010, with investment and business confidence suffering a serious setback.
Nearly half (49%) of the 1,895 professional accountants surveyed believe that conditions are stagnating or deteriorating, and for the first time in the survey's two-year lifespan, ACCA's key economic and business confidence indicators do not point towards improving conditions.
Crucially, the report says, the outlook for new orders has weakened during the past three months and more respondents are now reporting concerns about whether their suppliers can continue to be viable. Inflation continued to rise in the last quarter, with 35% of respondents seeing an increase in their operating costs, while slightly more accountants reported that their firms and clients were unable to obtain vital finance from banks and other lenders compared to three months ago.
While ACCA has warned that it is too early to tell whether any particular economies are about to suffer a renewed downturn, it expects that the next quarter's figures will show whether we are dealing with a temporary 'pause for breath' or something much more dangerous. The probability of the latter is reinforced by a sharp deterioration in the survey's investment indices. ACCA believes that governments' gradual withdrawal of support for investment over the past nine months is now beginning to tell as demand and financing conditions weaken once again.
Accountants based in Asia expect public spending to rise substantially. Members in the Asia Pacific region are much more confident that their governments can afford increased levels of spending.
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