Global economic confidence bounced back in the fourth quarter of last year to approximately the level it enjoyed in mid-2019, with a particularly strong improvement in North America, according to a new survey of accountants from the Association of Chartered Certified Accountants and the Institute of Management Accountants.
While the Global Economic Conditions Survey (GECS) of 2,560 accountants reported a recovery in economic confidence in all the key regions of the world, it also found that global confidence fell below its long-run average and forecast continued modest expansion in the world economy in early 2020. The full report is available
The U.S. GECS confidence measure improved significantly in Q4 to its highest level since 2018 Q2. Progress in the trade negotiations with China and the third quarter-percentage point cut in the U.S. Federal Funds rate since July may have helped improve overall sentiment.
“In 2019, the global economy expanded at close to 3 percent, the slowest rate since the financial crisis ten years ago,” Warner Johnston, head of ACCA USA, said in a statement Tuesday. The GECS foreshadowed this slowdown, which continued steadily throughout last year. Looking ahead, the GECS points to steady growth early this year, with no strong pick up but no global recession either. Many risks to the global economy in 2020 are the same as in 2019.
In other findings relating to the U.S., growth in the U.S. slowed last year as anticipated but did not come close to the recession forecast by many analysts. The GECS orders index consistently pointed to slowdown and not recession. For the year as a whole, GDP growth in 2019 will be close to 2.3 percent compared with 2.9 percent in 2018: weaker investment and trade were the main causes. The GECS capital expenditure index reflected a weaker investment climate in 2019, but did recover in Q4. Consumer spending held up well through much of last year, thanks to a buoyant jobs market and rising wages.
The global orders index, which is less volatile than confidence, was little changed for the third quarter in a row, and global investment and employment indices also were relatively stable in Q4, close to long-run averages. The global inflation picture continues to point to subdued cost pressures, reflecting the effects of a slowdown in economic growth.
“There are downside risks to the economy, the main one being a re-escalation of US-China trade tensions,” said IMA vice president of research and policy Raef Lawson in a statement. “But on the upside, last year’s monetary easing by the U.S. Federal Reserve and many other central banks will support growth in coming months. It is also a year in which we are encountering a U.S. presidential election, which often coincides with a buoyant economy. A global recession is very unlikely, but it will be another year of sluggish growth.”
