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The global economy grew substantially in the first quarter of 2012, reveals global survey of accountants


02 May 2012


Euro & Finance

- Employment continues to fall in Central and Eastern Europe

- But accountancy professionals expect to see government spending r5ise in coming months

The latest edition of the Global Economic Conditions Survey, conducted by ACCA (the Association of Chartered Certified Accountants) and the Institute of Management Accountants (IMA) suggests that the global economy recovered substantially in early 2012 and regained some of the dynamism it had lost over the last year.

The survey findings, representing the views of about 2,200 professional accountants around the world, were welcomed by the two professional bodies: the share of respondents reporting confidence gains in their own organisations had nearly doubled from 16% in late 2011 to 29%, and while the majority (54%) still believed the global economy was deteriorating or stagnating, that figure was down from 73% in the previous quarter.

The picture in Central and Eastern Europe

Confidence gains were relatively uniform across the region, with only Belarus and Croatia underperforming in the last quarter. Overall, 18% of respondents in Central and Eastern Europe reported confidence gains, up from 8% in late 2011, while 36% believe the global economy is recovering or about to do so, up from 14% previously.

This large region has seen a significant rise in new orders, but little of this has been accompanied by new capital spending; the survey’s employment index for the region continued to fall. Businesses also benefitted from lower levels of volatility in foreign exchange markets, but otherwise the actual business environment failed to improve in line with perceptions.

Professionals in the region are now expecting government spending to rise faster than they did three months ago, led by respondents in Poland, Croatia and Hungary. Overall, 57% expect spending to increase over the next five years, up from 36% in late 2011. The consensus is, however, that governments are going to be spending beyond their means: 57% expect the state to over-spend in the medium term, although this percentage has remained unchanged, suggesting that professionals have warmed to government spending.

Emmanouil Schizas, editor of the ACCA/IMA Global Economic Conditions Survey, said of the global findings:“When all the results came in, we were a little sceptical and had to consider all of the likely objections first. Much of the rise in confidence is being reversed as we speak, as the relief factor subsides, but a lot of it is here to stay.”

ACCA and IMA attribute much of the rise in global business confidence to objective improvements to the business environment, especially new orders, but also warn that relief is an important driver in the short term - especially due to the fact that a number of nightmare scenarios that had seemed likely in late 2011, such as an escalation of the European sovereign debt crisis or a hard landing in China, appeared more remote in the last quarter. There also appears to be a renewed faith in the prospects of the global economy and the strength of the recovery. These developments were also reflected in rising business investment and employment.

Confidence gains were fairly consistent across regions and industries, although the Americas and Western Europe seemed to benefit the most in early 2012, as did manufacturers and distributors, particularly in the high-tech sectors.

The survey reports increasing business dynamism, mostly in the Americas and Asia-Pacific, with businesses securing new orders where previously they would not have and responding with increased investment and hiring.

ACCA and IMA welcome this development, noting that investment has been subdued at the global level since the end of the ‘green shoots’ stage of the global recovery which lasted from mid-2009 to mid-2010. Africa is still the most confident of the seven major regions covered by the survey, but it is clearly losing ground.

ACCA and IMA believe that the bounce in investment is focusing on two kinds of opportunities in particular. Customer insights, namely the need to understand and benefit from spending decisions under new constraints, is one; the other is supply chain optimisation through deepening relationships and a stronger focus on quality.

The professional bodies also acknowledge the contribution of governments in their major markets, many of which showed signs of loosening their fiscal policies to boost a flagging recovery.It is not clear how much longer they can afford to do so, as respondents generally continue to believe that many major economies, including both the US and China, are likely to spend unsustainably in the medium term. On the other hand, finance professionals in Western Europe and other countries experiencing austerity alsodoubted the sustainability of their own governments’ fiscal policies.

Emmanouil Schizas said: “It’s too early to say whether the pattern of the modest recovery in 2012 is sustainable, but it seems to rely on a sustained recovery of demand in the West, supply in the East and confidence in sovereigns. It’s a precarious balance.”

Finally, ACCA and IMA note that the global economy’s new-found dynamismhas come at the price of rising input prices, and note thatif even a timid recovery is accompanied by rising inflation, then a full-blown recovery, if and when it occurs, is likely to provide a challenge for central banks and other policymakers.

- Ends-

For more information, please contact:

Helen Thompson, ACCA Newsroom

+44 (0)20 7059 5759

+44 (0)7725 498654

Notes to Editors

About ACCA

ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.  We support our 147,000 members and 424,000 students in 170 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. We work through a network of over 80 offices and centres and more than 8,500 Approved Employers worldwide, who provide high standards of employee learning and development. Through our public interest remit, we promote appropriate regulation of accounting and conduct relevant research to ensure accountancy continues to grow in reputation and influence.

About IMA (Institute of Management Accountants)

IMA, the association of accountants and financial professionals in business, is one of the largest and most respected associations focused exclusively on advancing the management accounting profession. Globally, IMA supports the profession through research, the CMA (Certified Management Accountant) program, continuing education, networking, and advocacy of the highest ethical business practices. IMA has a global network of more than 60,000 members in 120 countries and 200 local chapter communities. IMA provides localized services through its offices in Montvale, N.J., USA; Zurich, Switzerland; Dubai, UAE; and Beijing, China. For more information about IMA, please visit