October 22, 2021

ACCA and IMA Find Economic Recovery Loses Momentum in Q3 as Higher Prices and Shortages Hold Back Growth

DigitalCFO Newsroom | 13 October 2021

Global Economic Confidence Falls Most Significantly in North America, According to Survey of Accountants

The latest Global Economic Conditions Survey (GECS) by ACCA (the Association of Chartered Certified Accountants) and IMA® (Institute of Management Accountants) found that economic growth connected to pandemic recovery weakened in Q3 2021, with confidence falling most significantly in North America, while overall confidence and orders remain at high levels across regions. 

Global confidence fell by nine points in Q3, with the largest fall in North America (-41), followed by Western Europe (-24), pulling down the score. However, both regions are still at relatively high levels of confidence, as is the case globally. In fact, confidence jumped in Asia Pacific (+11) and South Asia (+20), after falls in the previous survey. The Middle East was the only region to record improved confidence for the six months of Q2 and Q3.

The full report is available here, or at https://www.imanet.org/insights-and-trends/global-economic-conditions-survey

GECS is the largest regular economic survey of accountants and finance professionals around the world jointly carried out quarterly by IMA and ACCA.

The report found that when looking at orders—which is a useful benchmark to measure real economic activity—there was a split between advanced regions and emerging markets. There were falls in orders affecting North America and Western Europe contrasted with modest improvements in emerging markets.

However, the wider economic prospects in developed economies remain brighter than in emerging markets, where low vaccination rates continue to drag on economic recovery.

Apart from Africa, all major regions are now reporting order levels above their pre-pandemic level, indicating a continued global recovery.

Another positive indication from the survey are the two “fear indices”, which measure concern that customers and suppliers may go out of business. Both declined again in Q3 and are now back in line with their long-run average levels after spiking around Q2 2020.

However, concern about operating costs is now at its highest level since the start of 2019 and increased five points globally in Q3. This is driven by higher transport and commodities costs, leading to higher inflation and weaker growth now.

“A moderation in growth was to be expected, as the pace set earlier this year could not be maintained indefinitely,” said Michael Taylor, chief economist at ACCA. “Although confidence and orders have lost momentum in regions including North America and Western Europe, we are still seeing an encouraging picture of global economic recovery overall.”

“Concerns about extra operating costs for businesses should prove temporary as the price mechanism operates to encourage increased supply and reduced demand,” Taylor continued. “But for now, the effects are to moderate global growth from a rapid to a steady pace. Nevertheless, growth should be sufficient for more economies to regain their pre-pandemic level of activity by the end of the year.”

“Although economic growth has slowed in many regions and the prevalence of the Delta variant of COVID-19 particularly in developed countries expectedly drove down global confidence, underlying demand remains strong,” said Loreal Jiles, vice president of research and thought leadership. “As COVID-19 vaccinations continue to increase and we remedy supply shortages and increased prices in advanced economies, there is an opportunity for overall confidence to increase significantly.”

About ACCA

ACCA (the Association of Chartered Certified Accountants) is the global professional body for professional accountants.