Facing a highly uncertain year ahead, amid a new U.S. administration, heightened geopolitical tensions, and various domestic economic and political challenges, the latest ACCA (the Association of Chartered Certified Accountants) and IMA® (Institute of Management Accountants) Global Economic Conditions Survey (GECS) of over 1,800 finance professionals recorded a marked fall in confidence in Q4 2024. There was also a sharp deterioration in the Employment Index.On a more positive note, there were small gains in the forward-looking New Orders Index and the Capital Expenditure Index,
Confidence fell markedly in Western Europe and is at its weakest since Q3 2022. Strikingly, UK confidence is at a record low, amid the announcement of large tax rises for employers in the recent Chancellor’s statement. There were also quite material declines in confidence in Asia Pacific and North America. Ongoing concerns about the Chinese economy and the risk of an increase in U.S. tariffs likely weighed on sentiment in the former. The fall in confidence in North America reflected a sharp deterioration in sentiment among Canadian respondents, with confidence in the U.S. rising for the second consecutive quarter, reflecting the ongoing resilience of the world’s largest economy.Encouragingly, cost pressures no longer look elevated by historical standards in most regions, although Western Europe is the clear outlier, with almost three-quarters of respondents reporting increased costs in Q4. Central banks in the region need to be careful not to prematurely declare victory in their battles against inflation.
Jonathan Ashworth, Chief Economist, ACCA, said: ‘The global economy proved quite resilient in 2024, aided by the strength of the U.S. economy. The greater resilience of the Global New Orders and Capital Expenditure indices would suggest that the global economy is not set to lurch downwards imminently. Nevertheless, while the Global Confidence Index can at times be volatile, its sharp decline attests to the significant nervousness among companies, given the enormous uncertainty at the current juncture. Against such a backdrop, there are significant downside risks to global growth over the coming year.’
Alain Mulder, Senior Director Europe Operations & Global Special Projects at IMA said: ‘Confidence in the U.S. registered a reasonable gain after a large increase previously and is now slightly above its historical average. There were also improvements in the other key indicators by varying degrees. This is clearly an encouraging sign, because the U.S. is the only major engine of the global economy where activity is showing significant resilience at the present time.’
Accountants identified their top three risk priorities at the end of 2024. Although economic risks remained the highest priority for the second year running, talent scarcity, regulatory change, and cybersecurity ranked much closer to the top than in Q4 2023. Responses in Q4 2024 showed noteworthy regional and sectoral nuances. For example, Central and Eastern Europe was the only region to rank cybersecurity as its highest risk priority, while talent scarcity was most important in Asia Pacific and Western Europe. South Asia and North America also stood out for keeping geopolitics in their top three.Read the report
