Finance professionals' economic confidence continued rising in North America through Q2 despite stalling globally, according to results of the latest Global Economic Conditions Survey (GECS) from ACCA (the Association of Chartered Certified Accountants) and IMA® (Institute of Management Accountants). 

Sentiment at the global level remains around its long-term average, as do the key indices--new orders, Capital expenditure and employment--while those key indices rose in the North American market. In contrast, confidence fell sharply in Asia Pacific and export-sensitive Western Europe.

Published quarterly, GECS is the largest regular economic survey of accountants carried out globally. The full report is available at https://www.imanet.org/About-IMA/GECS.  

The report explores how ongoing aggressive interest rate hikes by central banks, and China's weaker than expected economic recovery, have likely weighed on confidence. Those effects are believed to be offsetting receding fears of a global banking crisis and falling inflation, leading to flat confidence across many markets.

The report shows no evidence that a global recession is on the cards. One surprising finding is that aggressive monetary tightening has not had a material impact on the GECS "fear'' indices, which measure respondents' concerns that customers and/or suppliers may go out of business. Both these indices continue to improve, which suggests little concern about the impact of higher interest rates, recession risks, or the growing number of bankruptcies.

However, there may be a lagging effect of tighter monetary policy working its way through the global economy and financial system. Indices measuring global problems accessing finance and securing prompt payment both deteriorated in Q2, although neither looks particularly worrying yet by historical standards. Meanwhile, the percentage of global respondents concerned about increased costs declined slightly again, although it remains very elevated by historical standards, suggesting that central banks may have more work to do.

"The survey results aligned with my sense of how things are developing in the global economy, with some loss in momentum through Q2," said Jonathan Ashworth, Chief Economist at ACCA. "Things don't look particularly alarming though, and a global recession does not look imminent."

He continued: "By region, things aren't looking that great in Asia Pacific and Western Europe. Chinese policymakers may need to increase policy stimulus, while the ECB and BoE might want to tread carefully with monetary tightening. In contrast, the U.S. economy is looking pretty resilient, suggesting the Fed may be able to carry off the much talked about soft landing."

Dr. Susie Duong, Director of Research at IMA, said: "Looking at the change in the GECS Confidence Indices over the year, one notable factor is the resilience of North America. With a stronger than expected growth of the U.S. economy in 2023 Q2, it suggests that an imminent recession for the U.S. does not seem likely this year, although Asia and Europecould increasingly become a drag if growth decelerates significantly there. The robustness of the global 'fear' indices is also unexpected. However, it's less clear that will still be the case at the turn of the year."