Accountants see chances of swift recovery slipping away

Accountants around the world are seeing the prospects for swift economic recovery slipping away amid a resurgence in COVID-19.

The latest edition of the quarterly Global Economic Conditions Survey from the Association of Chartered Certified Accountants and the Institute of Management Accountants found that confidence fell in North America in the fourth quarter of 2020, after surging in the third quarter. On the other hand, there was a big improvement in confidence in the Middle East, perhaps due to a rebound in oil prices. More than 50 percent of the accountants who responded to the survey in the Asia Pacific region, North America and South Asia expect sustainable recovery in the second half of this year.

Expectations for an economic recovery rose late in 2020 as pharmaceutial companies began producing coronavirus vaccines, but the slow pace of the rollout due to manufacturing and distribution delays is likely to dampen optimism further. Accountants report that the companies and firms where they work anticipate pent-up demand for products and services once vaccines are widely available and people are able to travel more freely, although the mutating strains of the virus are adding uncertainty to those prospects.

Eve Edelheit/Bloomberg

“Last year was the worst for the global economy for several decades,” said Warner Johnston, head of ACCA USA, in a statement Tuesday. “2021 will see recovery, but precisely when and how strong it will be is very uncertain. We anticipate a weak start, followed by a recovery gathering momentum through the second half. Much depends on the evolution of the COVID virus and variants relative to the progress of vaccination programs, and there is great uncertainty surrounding these developments.”

Confidence among accountants fell in the ACCA and IMA’s Q4 survey, after jumping by the greatest percentage on record in Q3. Orders and capital spending showed little change in Q4 and remained well below their pre-crisis levels of a year ago. Employment recovered significantly in Q4 on the index, thanks to a relatively good jobs market rebound since the early weeks of the pandemic. Overall, the survey indicates expectations among accountants for continued economic recovery in early 2021.

Concerns and fears about customers and suppliers going out of business edged lower worldwide in Q4 but remain elevated, highlighting the extreme uncertainty in the global economic outlook at the beginning of 2021. More than half of the respondents in Asia Pacific, North America and South Asia expect sustainable recovery in the second half of this year.

However, in many parts of the world, the likelihood of a swift recovery is dim for this year, especially where the vaccine rollout has barely begun at all.

“The pandemic has forced millions into extreme poverty as emerging markets suffered recession for the first time in decades last year,” said IMA vice president of research and policy Raef Lawson in a statement. “Policy responses to the pandemic have left the public finances of most economies in a perilous state with budget deficits in the range of 10 percent to 15 percent of GDP in many countries with debt to GDP ratios well over 100 percent.”

In Africa, for example, the renewed rises in infections toward the end of 2020, along with a continuing absence of foreign tourists, point to a weak start to 2021. The declining amount of GDP per capita across the region, according to the World Bank, will push tens of millions of people into extreme poverty.