Claims that the world’s economy is recovering is based on fragile evidence, according to the latest Global Economic Conditions Survey by ACCA (the Association of Chartered Certified Accountants).
ACCA has repeated its warning that world economic leaders should guard against complacency - and not confuse less panic over the crisis with strong evidence that the recession is over everywhere.
Helen Brand, ACCA chief executive said: "Our survey shows that business confidence is recovering more slowly in the third quarter than earlier in the year when respondents may have stopped panicking about a recession which had seemed to be out of control. The evidence is that little has changed in trading or orders to suggest that a reliable recovery will happen before the end of 2010."
"We have already warned governments not to allow a growth in confidence to lead to complacency which may stop them from taking necessary steps to reform the economic system. While the situation may not worsen, the view from finance professionals is that a sustained recovery is still someway off and that many economies are in a fragile state."
ACCA’s third quarter survey of 1,200 finance professionals in 92 countries has shown that while more finance professionals now believe the downturn has ‘bottomed out’ they also believe that a reliable recovery is still unlikely to return before late 2010 - more than a year away.
Although business confidence continued to recover in the third quarter of 2009, those who saw improvements in conditions (31%) were still outnumbered by those who had lost confidence (33%).
While increasing percentage of members (34%) now believe that global economic conditions are either about to improve or already improving, the emerging consensus, expressed by 44% of respondents, appears to be that current conditions mark the bottom of the downturn and will persist for some time.
Nearly 40% are reporting that their organizations’ income is unlikely to change over the next 3 months, with an equal number anticipating further losses of income, while only 22% have seen their prospects improve.
The survey also shows that as business incomes continued to decrease in the third quarter of 2009, there was a rise in late payment as well as supplier and customer bankruptcies.
Investment in staff fell at an accelerated rate in the third quarter and investment in capital projects, which had previously shown signs of stabilizing, seems to be weakening further.
The global survey does highlight substantial regional variations - with the Asia-Pacific region, Africa and, to some extent, Central and Eastern Europe, reporting much higher levels of business confidence and are more optimistic than their counterparts in Western Europe and the Americas.
The figures also revealed dramatic differences in how finance professionals thought government would react to the situation, with 77% of respondents in Africa and 60% in the Asia-Pacific region expecting increases in public spending, while 68% of Western European respondents expecting spending cuts.
Western Europe was the only region in which public spending was, on balance, expected to fall over the next five years.