Global economic growth is likely to weaken for the remainder of 2022, according to the latest edition of the Global Economic Conditions Survey (GECS) from the ACCA (Association of Certified Public Accountants) and the Institute of Management Accountants (IMA).
A new report shows that economic confidence among financial professionals and accountants in North America has returned to levels seen at the height of the 2020 Covid-19 pandemic. Confidence fell in Asia-Pacific (-20) and South Asia (-30). After rising in the previous survey.
The decline in confidence and South Asia GECS orders were broadly in line with global averages for the quarter. In India, the region’s largest economy, the central bank has raised interest rates from 4% to 4.9% since May to combat rising inflation toward 7%. Across the region, prices of key imports such as fuel and cooking oil have risen sharply in the wake of the war in Ukraine. The pandemic and the aftermath of the war will significantly increase the number of people living in extreme poverty, the study says.
The Second Quarter Global Economic Conditions Survey (GECS), conducted in mid-June, pointed to a decisive deterioration in the outlook for the global economy.
Capturing the impact of geopolitical issues and surging inflation in many parts of the world, the second quarter survey saw all major global indicators fall. The decline in global confidence has been particularly steep, but it is above the low point reached at the height of the COVID-19 pandemic.
Indicators more closely related to economic activity, such as orders, employment and business investment, also fell in the second quarter, but more modestly than confidence. The conclusion from this his GECS is that while the risk of a global recession is rising, the most likely outcome is one of weaker growth for the rest of the year.
The biggest drop in confidence came in the Middle East, a region exposed to trade with Russia/Ukraine, but North America and Western Europe suffered particularly sharp falls due to significant increases in inflation in recent months. was recorded. North America is the only country in 2020 where confidence has fallen to levels seen during periods of high economic uncertainty.
In their list of top concerns since the first-quarter survey, financial experts trade fears of Covid for fears of rising inflation and interest rates. But for his third straight time, GECS ranks short supply and supply chain issues among the top risks. Hopefully this issue will become less important as 2022 progresses.
But while risks are mounting, there are signs that a global recession is averted. The outlook has dimmed, but the decline in confidence far outweighs the reported drop in orders. In fact, orders, a leading indicator of economic activity, are above their long-term average. The employment index is also well above its long-term average, despite a decline in the second quarter. Job markets are tight and employment is rising in many countries, partially offsetting the impact of high inflation on real incomes.
But while confidence among financial experts has plummeted, global confidence levels remain above the low point reached at the height of the COVID-19 pandemic, survey says. .
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