Accountants in North America more confident about economy

Economic confidence among accountants in North America rebounded dramatically in the fourth quarter of 2023, after a steep drop in Q3. But that boost in confidence didn’t happen in most other parts of the world, declining among accountants globally for the third quarter in a row.

The quarterly Global Economic Conditions Survey, released Thursday by the Association of Certified Chartered Accountants and the Institute of Management Accountants, polled a group of 1,447 members of the ACCA and the IMA in the fourth quarter and found improvements in South Asia and the Middle East, in addition to North America. However, economic confidence dropped for the third straight quarter in Western Europe. It also declined materially in Asia Pacific, perhaps reflecting concerns about China’s economic recovery. In the meantime, confidence plummeted sharply in Africa, erasing gains made earlier in the year.

“The very large rise in North America puts confidence in the region close to its long-term average,” said Susie Duong, senior director of research and thought leadership at IMA, in a statement. “This perhaps reflects increased confidence that the U.S. Federal Reserve may be able to pull off a soft landing in 2024. However, the employment index fell sharply, together with moderate decline in capital expenditure and new orders, suggesting that companies are cautious about expansion before it becomes obvious how the economy performs.”

Fears among accountants that their customers or suppliers could go out of business don’t look alarming by historical standards. But with corporate bankruptcies rising, and monetary policy tightening working with a lag, it would be a surprise if there isn’t a rise in concerns in 2024.

Across the globe, accounting professionals ranked economic risks, talent retention, and regulatory change as their top three risks, according to the survey. In contrast, a year ago, regulatory change, cybersecurity and economic risks were cited as the top three risks. Geopolitics has also significantly moved up the ranks of risk listed by respondents. Those who work in financial services tend to view geopolitical risks through the cybersecurity lens, while in the corporate sector, they see the threats more as business-critical risks, including supply chain disruption.

“Concerns among accountants about increased costs eased slightly again in the latest quarter, but remain elevated by historical standards,” said ACCA chief economist Jonathan Ashworth in a statement. “This suggests that the risk is that financial market expectations may be too optimistic on the timing and magnitude of central bank rate cuts in 2024.”

Globally, the latest survey suggests that confidence among accountants and finance professionals declined slightly for the third quarter in a row and is now moderately below its long-term average. There was also a decline in the Employment Index part of the survey, which is at its weakest level since the fourth quarter of 2020, consistent with some easing in job markets. Meanwhile, the New Orders Index part of the survey increased fractionally and is just above its average, while capital expenditure improved but remains below average.