Global Survey of Accounting Professionals Points to China Slowdown, Countries' Lack of Policy Options

The global economic recovery has slowed down again in early 2012, according to a worldwide survey of finance professionals who fear that governments which are already living beyond their means may struggle to get it back on track through extra public spending.

HONG KONG, July 20, 2012 /PRNewswire-Asia/ -- The Global Economic Conditions Survey (GECS) for the second quarter of 2012, undertaken by ACCA (the Association of Chartered Certified Accountants) and IMA (the Institute of Management Accountants), cautioned that growth across the world's most developed economies has stalled once again and that the global economy is as fragile as it has ever been in the last three years. The global survey of 2,700 accounting professionals, now well into its third year, suggests that hints of a stronger recovery in early 2012 were mostly down to misplaced optimism, and that most of the gains made at the time have since been reversed.

China's slowing economy has dominated the survey findings this quarter, although ACCA and IMA stress that there are few signs of the hard landing many commentators had feared. That said, both confidence and investment are falling despite increasing business opportunities.

Manos Schizas, Survey Editor and Senior Economic Analyst with ACCA said: "The point now is to see how far and how fast the Chinese slowdown will travel. Our members in Africa tend to feel any fallout from Asia fairly quickly, and there could be implications for other markets which trade with China."

According to the survey, the flip side of the Chinese slowdown is a recovery for the US economy, where investment is on the rise and confidence is high, despite significant potential problems.

With growth faltering once again, the finance professionals surveyed by ACCA and IMA are rethinking their attitudes towards public spending. However, the policy choice is not quite so simple. Accounting professionals working in major markets such as the US, China, Russia, Malaysia, or Pakistan - economies relied on by others for trade and export opportunities - believe that fiscal stimulus by their governments is already unsustainable. It was in only a few markets that respondents believed that their governments could spend both robustly and sustainably - places such as Singapore, or the UAE.

Manos Schizas said: "Finance professionals who responded to this survey were quite at ease with the prospect of austerity until mid-2010. Then the recovery failed to take off and everything changed. Relatively few believe their governments can make austerity work, even in countries such as Ireland where it has been executed quite successfully. Except this time there is a limit to what even countries with strong credit ratings and no liquidity constraints, such as the US and China, can do."

The situation in China (including Hong Kong SAR)

The survey revealed a significant slowdown in China, although not the hard landing many commentators have warned of.  For many months, respondents' views in the Chinese mainland and Hong Kong SAR have diverged, with those in Hong Kong experiencing worse conditions and reporting poorer expectations. This contrast has narrowed somewhat in the past six months but remains significant.

Only 2% of respondents in Hong Kong reported confidence gains in the last three months, which meant that the SAR remained the least confident market in the sample, compared to 22% in the mainland, where confidence was only marginally lower than in the total ACCA / IMA sample. This is mostly a result of significantly different views of the global economy: 44% of respondents in the mainland believe that it is recovering or about to, compared to 14.5% of those in Hong Kong.

ACCA and IMA claim that, while perceptions have deteriorated significantly since the previous quarter, the business environment has not. While there is some evidence of cash flow stress and persistent inflation, demand is currently holding up better than in late 2011 and employment has not been severely affected yet.

Throughout China, however, respondents here reported a fall in new orders and capital spending consistent with a significant slowdown. This appears to be driven by international firms (whether domestic or foreign) hedging against a slowdown in China, much more than by the investment environment itself. If anything, this is becoming more benign with access to finance becoming easier and more investment opportunities arising, according to respondents. In particular, more finance professionals are seeing opportunities for firms investing in innovation and exploiting changes in buying behaviour.

The picture in the AsiaPacific region

Once the undisputed leader of the global recovery, the Asia Pacific region now lags behind the global average as the ongoing slowdown in China, sluggish demand and the fallout from the Eurozone debt crisis have taken their toll. Only 14% of respondents in the region (down from 23%) said they were more confident now than three months ago, and 65% believed the recovery was no longer on track, up from 57%. Singapore, Hong Kong SAR and Malaysia appear to be lagging the rest of the region, while Australia and New Zealand are also underperforming.

Inflation is still on the rise across the region, but there is evidence that business revenues are stabilising, while firms are adopting a wait-and-see approach with regards to investment and hiring and seeking opportunities in the changing behaviour of cash-strapped buyers around the world.

Here is the link to the full report:

http://www.accaglobal.com/content/dam/acca/global/PDF-technical/global-economy/tech-ms-gec14.pdf

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. As the first global accountancy body entering into China, ACCA now has over 22,600 members and 42,500 students, with 7 offices in Beijing, Shanghai, Chengdu, Guangzhou, Shenzhen, Hong Kong SAR, and Macau SAR.

Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. We believe that accounting professionals bring value to economies in all stages of development. We aim to develop capacity in the profession and encourage the adoption of consistent global standards. Our values are aligned to the needs of employers in all sectors and we ensure that, through our qualifications, we prepare accountants for business. We work to open up the profession to people of all backgrounds and remove artificial barriers to entry, ensuring that our qualifications and their delivery meet the diverse needs of trainee professionals and their employers.

We support our 154,000 members and 432,000 students in 170 countries, helping them to develop successful careers in accounting and business, with the skills needed by employers. We work through a network of over 80 offices and centres and more than 8,400 Approved Employers worldwide, who provide high standards of employee learning and development.

www.accaglobal.com

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 www.imanet.org.