The Q3 2020 survey, which features specific COVID-19-related questions, points to global recovery through the second half of 2020 after the unprecedented collapse in activity during the first half. But while there may be some economic expansion late this year, the survey revealed increasing expectations that significant economic recovery will be pushed into 2021. 

Activity indicators covering orders, capital spending and employment all bounced back to some degree from low points reached in the second quarter survey. The global orders balance recovered by nine points in the third quarter, signalling a modest turnround. Other measures, including concern that customers and suppliers may go out of business also improved slightly from extreme levels last time.

“The nature and prolonged duration of the COVID-19 shock means that it is likely to result in permanent changes to the structure and potential growth rates of economies,” said Raef Lawson, Ph.D., CMA, CPA, IMA vice president of research and policy. “Higher private sector savings may be one outcome: households and companies limit consumption and investment respectively as they remain cautious in the face of extreme uncertainty. This suggests that the public sector may have to run significant fiscal deficits for some time in order to support overall demand. For now, at least mounting public sector debt can be sustained since interest rates are exceptionally low.”          

The momentum of the current recovery is likely to fade towards the end of the year and into 2021. “More generally the continued prevalence of the virus means that social distancing rules and other containment measures will persist for the foreseeable future,” said Warner Johnston, Head of ACCA USA. “This will adversely affect consumer demand in particular areas. Most economic shocks do not result in permanent changes in economic behavior. But the COVID-19 shock is likely to be different: it already has lasted for the first three quarters of 2020 and will do so well into 2021. This, and the nature and scale of the economic impact, means that permanent changes to the structure of economies are inevitable.”

The report found that confidence in the third quarter recovered strongly to a 3 1/2-year high as the deep gloom caused by lockdowns lifted in most regions; North America is the most optimistic, while South Asia has the greatest proportion of respondents not expecting recovery until next year.

In North America, the report found that the orders balance recovered significantly in the third quarter but with the exception of previous quarter is at a record low level. Additionally, the increase in confidence this quarter was the largest quarter-to-quarter increase in the history of the survey, reflecting the transformation in the economic outlook between June and September.

Overall, the North American region is consistent with a reasonably strong recovery in the second half of the year. As expected, the March to June quarter witnessed some record quarterly falls in Gross Domestic Product (GDP), including 9.1% in the United States. The current forecast for quarter on quarter GDP in the third quarter is around 7% in the United States.

Further, expectations of substantial economic recovery have shifted decisively towards later in 2021 over the last three months, including above 50 percent in North America. Responses to this question highlight the realization that the economic damage caused by COVID-19 and associated restrictions will persist well into 2021.

Additionally, the survey identified a clear regional pattern with the strongest access to finance in the developed markets of North America and Europe, and the weakest in Emerging Markets. This did not change between the June and September surveys.

Fieldwork for the Q3 2020 GECS took place between August 25 and September 8, 2020 and attracted responses from 1,067 ACCA and IMA members around the world, including more than 100 CFOs. The COVID-19 questions elicited 789 responses.

About ACCA
ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants, offering 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.

ACCA supports its 227,000 members and 544,000 students (including affiliates) in 176 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 110 offices and centres and 7,571 Approved Employers worldwide, and 328 approved learning providers who provide high standards of learning and development. Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence.

ACCA has introduced major innovations to its flagship qualification to ensure its members and future members continue to be the most valued, up to date and sought-after accountancy professionals globally. Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. More information is here: www.accaglobal.com

About IMA® (Institute of Management Accountants)
IMA®, named the 2017 and 2018 Professional Body of the Year by The Accountant/International Accounting Bulletin, 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) and CSCA® (Certified in Strategy and Competitive Analysis) programs, continuing education, networking and advocacy of the highest ethical business practices. IMA has a global network of more than 125,000 members in 150 countries and 300 professional and student chapters. Headquartered in Montvale, N.J., USA, IMA provides localized services through its four global regions: The Americas, Asia/Pacific, Europe and Middle East/India. For more information about IMA, please visit www.imanet.org.

SOURCE ACCA (the Association of Chartered Certified Accountants)

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