Global economic confidence rebounds among accountants

Accountants expressed much higher confidence in the economy during the first quarter of this year compared to last year, especially in North America, according to a new survey.

The survey, by the Association of Chartered Certified Accountants and the Institute of Management Accountants, polled more than 1,000 senior accountants and finance professionals around the world, and found the biggest quarterly jump in confidence in a decade, thanks to increasing supplies of vaccines and continuing fiscal stimulus from many governments. The ACCA and IMA’s Global Economic Conditions Survey saw a nearly 30-point jump in the confidence index globally and more than 40 points for North America in the first quarter of 2021, compared to the fourth quarter of 2020. However, the two “fear” indices in the survey, which measure concern that customers and suppliers could go out of business, offered contrasting messages. Fear that customers would go out of business declined significantly while fear that suppliers would do so rose slightly higher. But both factors remain at relatively high levels, underscoring the high level of uncertainty that remains in the world economy.

The rollout of COVID-19 vaccines in recent months have helped improve economic confidence in many parts of the world. However, the growing number of COVID-19 variants that seem to spread more easily has also led to uncertainty and some European countries have been forced to retreat on their reopening plans. In many parts of the world, access to vaccines remains severely limited. Accountants in Western Europe, Africa and the Middle East did not register as much of an increase in economic confidence as those in North America and Asia.

“This crisis is different as its root cause is health and not economic,” said IMA vice president of research and policy Raef Lawson in a statement Monday. “For now, global COVID-19 infections are high relative to the vaccination rate, so risks remain significant. But the huge government support provided to both households and companies over the last year leaves both well-placed to resume spending once the health crisis is over. There are likely to be permanent changes in the pattern of spending and other long-term economic consequences of the COVID crisis.”

Economic activity indicators for orders, capital spending and employment all increased to some extent in the first quarter of this year, according to the survey, echoing the level of confidence in the fourth quarter of 2019 before the spread of the COVID-19 pandemic.

“Having suffered the biggest recession for several decades in 2020, the global economy is on course for a relatively quick rebound,” said ACCA chief economist Michael Taylor in a statement. “The good news is that vaccination plans with continued policy support are on course to lift the global economy out of the COVID abyss this year.”

The report acknowledged that vaccination rates vary significantly across different countries, and vaccination can replace lockdown measures as a way to control COVID-19, allowing economic conditions to return to normal. But government policy is also crucial. A major fiscal stimulus in the U.S. is likely to have a positive spill-over impact on other economies around the world this year. Particularly in advanced economies, a large pile of savings accumulated during the periods last year when spending was severely limited, and those funds can provide a source of extra demand once economic conditions improve. Based on those criteria, the U.S. and the U.K. seem to have better growth prospects than the Eurozone, while China is likely to continue to experience strong growth. Emerging markets may also benefit from increased global demand, but vaccination rates will probably remain low in many countries through the rest of this year.