South Asia showed a marked improvement in confidence and orders in Q4, after exceptionally weak Q3 survey results
Accountants and
finance professional experts say economic confidence in Q4 2020 stalled and
remains fragile heading into 2021, finds the latest ACCA and IMA Global
Economic Conditions Survey (GECS).
Tracking confidence
and fear indices, the global survey of more than 3,000 senior professionals with
201 in South Asia - including Pakistan - reflects the outlook and
experiences of the thousands of businesses they advise.
The results for South
Asia show:
·
South Asia has been hit hard by the
pandemic as economies reliant on services and tourism are prevalent in the
region.
·
The Q4 survey shows signs of recovery
with a rise in all the main activity indicators, including orders and
employment.
·
But any growth revival will be
fragile and subject to avoiding renewed COVID infections.
·
The ‘fear’ indices - concern about
suppliers and customers going out of business – fell back in Q4: the former
remains elevated but the latter is close to its long-run average.
·
South Asia recorded the biggest jump
in orders in Q4,,recovering after a big drop in the Q3 survey.52 per cent of
respondents in South Asia expect a significant economic recovery in the second half of this year or later –
the highest among the major regions.
Sajjeed Aslam, head
of ACCA Pakistan says: ‘The impact of COVID-19 on the global, South Asia and
Pakistan economies has been significant. However, respondents across South Asia
appear reasonably confident about the year ahead, looking to a recovery, perhaps
spurred by policy responses and the news of vaccines being available. 2021
presents a long road to recovery ahead, and one in which accountants will be
playing a key role.’
The global 2020 Q4
findings reveal the 'fear' indices - concern about
customers and suppliers going out of business - edged lower in Q4 but remain
elevated. This clearly underlines the extreme uncertainty in the global
economic outlook at the start of 2021. The confidence measure fell back
in North America, having surged in the previous Q3. By contrast there was a big
improvement in Middle East confidence, buoyed probably by continued recovery in
oil prices. Inflation concerns remain negligible with
concern about costs staying close to an all-time low.
Outlook
for 2021
Looking
ahead, over
50% of respondents in Asia Pacific, North America and South Asia expect
sustainable recovery in the second half of this year. The most optimistic in
this respect is the Middle East, where 54% expect recovery during the first
half of the year.
Michael
Taylor, Chief Economist at ACCA says: ‘Last year was the
worst for the global economy for several decades. 2021 will see recovery but
precisely when and how strong it will be is very uncertain. We anticipate a weak start, followed by a recovery
gathering momentum through the second half. Much depends on the evolution of
the COVID virus and variants relative to the progress of vaccination programmes
and there is great uncertainty surrounding these developments.
‘Since
our polling in December, many countries have seen increased COVID-19
infection rates, prompting governments to re-impose restrictions including
national lockdowns. This means that global economic prospects early in 2021
have deteriorated since the Q4 survey. At the same time there has been progress
on the approval of vaccines, raising hopes of a permanent improvement in
economic conditions later this year.’
However,
ACCA and IMA highlight that, unemployment rates will be rising in many
countries, potentially undermining consumer confidence and limiting the
strength of a rebound.
Raef Lawson, Ph.D., CMA, CPA, IMA vice president of
research and policy, said: ‘The pandemic has forced millions into
extreme poverty as emerging markets suffered recession for the first time in
decades last year. Policy responses to the pandemic have left the public
finances of most economies in a perilous state with budget deficits in the
range of 10% to 15% of GDP in many countries with debt to GDP ratios well over
100%.’
He added: ‘All this
presents a big test for policy makers in terms of when to withdraw policy
support and when policy should be tightened to rebuild public finances. Policy
mistakes would risk derailing economic recovery.’
Fieldwork for the
2020 Q4 survey took place between 20 November and 8 December 2020 and attracted
3086 responses from ACCA and IMA members, including over 300 CFOs.
GECS can be found here:
https://www.accaglobal.com/gb/en/professional-insights/global-economics/2020-GECS-Q4.html
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