LAHORE: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.
According to a press release, 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.