Accountants and finance professionals felt less confident about the global economy in the fourth quarter of 2021 as COVID-19 continued to spread around the world, according to a new survey, but North American accountants felt more optimists.
The quarterly Global Economic Conditions Surveyreleased Wednesday by the Association of Chartered Certified Accountants and the Institute of Management Accountants, found that economic confidence fell 12 points globally in the fourth quarter of 2021, but North American respondents’ economic confidence rose by 10 dots.
“Accountants are often the first to feel the impact of economic activity, informed by the work they do every day to support savings and by feedback from their clients, particularly in the small business sector,” said said ACCA Chief Economist Michael Taylor in a statement. “Their comments reveal concerns about further cost increases, seeing this metric double over the course of 2021, indicating growing inflationary pressures in many markets around the world.”
Global orders changed only marginally in the fourth quarter, rising only one point, indicating that growth will continue at a strong pace at the start of this year. The other activity indicators have changed relatively little, with the investment expenditure index up one point and the employment index down six points compared to Q3. Concerns about vendor and customer outages were also little changed in the fourth quarter, but were above pre-pandemic levels.
Economic confidence fell the most in Western Europe, by 28 points, which was the first region to see a rapid spread of the omicron variant. Confidence rose slightly in two regions: Asia-Pacific by 5 points and North America by 10 points. Only the Middle East posted a drop in the orders index of six points, with South Asia recording the largest increase – eight points.
“We asked our respondents about the risks they perceived for 2022, and perhaps unsurprisingly, the main risk identified was related to COVID and new waves of infections, with more than 70% of respondents saying it is. was a key risk,” the IMA vice president said. research and thought leadership Loreal Jiles in a statement. “Supply shortages came second, with the problem having already slowed economic growth at the end of 2021. Policy tightening, monetary or fiscal, is less of a concern, as are climate change policies .”
The ACCA and IMA predict that there will be further progress towards a more normal economic environment with global GDP growth of around 4%. “Features of this return to normal include reduced household savings offsetting the withdrawal of COVID fiscal support, easing supply shortages and continued growth in employment levels,” Jiles added. “Although omicron may slow economic growth through its effect on consumer spending and worker absenteeism, the impact on economic activity is expected to be modest and likely to be relatively short-lived.”
The main economic risk they see this year is that inflation, which is already high, will stay higher for longer, in part due to prolonged supply shortages. Additional inflation could trigger more monetary tightening than financial markets currently expect, which could slow global economic growth and prevent a return to pre-pandemic trends.
“Some emerging markets made progress, while others, like South Africa and Indonesia, suffered further economic contraction,” Taylor said. “Overall, their recovery to the pre-pandemic trend growth rate remains hampered by a lack of fiscal capacity and slow progress in immunization.”