Accountants more pessimistic about global economy

Global confidence among accountants and finance professionals globally declined moderately in the third quarter of this year and is now at its lowest level since Q4 2023, although confidence increased in North America, according to the quarterly Global Economic Conditions Survey from the Association of Chartered Certified Accountants and the Institute of Management Accountants.

The survey, released Tuesday, found that CFOs’ confidence also declined globally amid a sharp deterioration in their assessment of new orders. Even though confidence improved in North America, it recovered less than half of its previous decline. In contrast, there was a significant decrease in confidence in the Asia-Pacific region. Concerns about the continued weakness of the Chinese economy probably weighed on sentiment, with the survey being completed before the authorities announced a pivot to a more aggressive policy stimulus. Confidence also fell significantly in Western Europe, driven by a decline in U.K. confidence, amid concerns about tax hikes in the upcoming budget.

The survey also asked accountants to rank their top three risk priorities, and for the second consecutive quarter regulatory change ranked first for respondents in financial services, while the economy remained in first place for those in the corporate sector. Both public sector entities and small and midsized practices cited cybersecurity as their largest concern. But for the first time, climate change claimed a spot in the top three, with the public sector placing it third. Another first-ever was by region, with Western Europe ranking talent scarcity and retention first.

“The global economy has been quite resilient so far in 2024, but the latest survey of accountants points to some easing in growth at the current juncture,” said ACCA chief economist Jonathan Ashworth in a statement. 

The proportion of respondents reporting increased operating costs remains elevated by historical standards in most parts of the world, although the share of global respondents reporting problems accessing finance moved lower again amid policy easing by central banks. 

In North America, confidence improved somewhat in Q3, but recovered less than half of Q2’s decline, and remained below its historical average. The New Orders, Capital Expenditure and Employment Indices all declined in different degrees and are well below their historical averages. The proportion of respondents reporting increased operating costs eased to its lowest since Q1 2021, while remaining high by historical standards. 

“All in all, while the increase in confidence is welcome, the key indicators are consistent with some slowing in the U.S. economy and significant caution on behalf of businesses,” said the report. “But with the job market showing resilience and the Federal Reserve beginning its rate-cutting cycle, the most likely scenario for the U.S. economy still looks to be a soft landing. Nevertheless, given the uncertainty faced by firms amid the election, and sharply heightened geopolitical tensions, one cannot rule out a sharper-than-expected slowdown.”