KUALA LUMPUR, July 19 (Bernama) -- Global economic confidence dipped back in Q2 2019, partially reversing the bounce seen for the first time in a year in Q1 2019, finds the latest Global Economic Conditions Survey (GECS) from ACCA (the Association of Chartered Certified Accountants) and IMA^® (Institute of Management Accountants).
 
The global poll of 1,162 accountants shows that confidence remains above the record low reached at the end of 2018, consistent with a modest global economic slowdown.
 
The global orders index – a lead indicator of activity – also fell in Q2 and is consistent with this view. Significantly, global cost pressures eased again, with 45% of respondents citing this as an issue, down from 55% a year ago.
 
Sentiment in the US and China revealed high levels of uncertainty, with the US results showing a sharp fall in confidence to the lowest level in eight years, largely due to trade tensions as tariffs were increased to 25% on a range of Chinese imports. The orders index points to a slowdown in US growth through the second half, but no recession.
 
Chinese data indicates a weakening picture with significant falls in confidence and orders in the quarter. The short term outlook is relatively weak with data so far this year showing falling imports and anaemic industrial output.
 
Confidence in the Asia Pacific region fell in Q2, to the lowest level in a year. Increased perceived risk around the US-China trade dispute was almost certainly a factor in this. The effects of a US-China trade war would be felt across the region and would be negative, overall. Regional supply chains feeding into Chinese exports will hurt many economies in the region and a weaker Chinese economy generally results in reduced demand for imports from other countries within the Asia Pacific region.  A potential offset to this could be the relocation of industries to other Asia Pacific countries from China in order to avoid high US tariffs. But the near-term effects will undoubtedly be negative.
 
Michael Taylor, chief economist at ACCA says: ‘The GECS points to a slowing global economy with significant downside risks reflected in weak confidence. The biggest risk to the global economy remains a significant further escalation in the US-China trade war. A sharp slowdown in China and a no deal Brexit are additional downside risks.’
 
Raef Lawson, Ph.D., CMA, CPA, IMA vice president of research and policy stated: ‘The US economy is slowing and uncertainty is high as shown in the latest GECS with elevated trade tensions a major factor. But the Federal Reserve is very likely to cut interest rates later this month, helping to sustain the economic expansion, which has now lasted uninterrupted for 10 years.’
 
The GECS concludes with a view of the outlook for global growth, which this year remains a slowdown to between 3% and 3.5% from 3.8% last year. The good news is that persistent sub-target inflation, notably in the US and euro area, gives central banks the opportunity to ease monetary policy.
 
The full GECS for Q2 2019 is available at this link: https://www.accaglobal.com/gb/en/professional-insights/global-economics/gecs-report-q2-2019.html
  
Source: ACCA Malaysia 

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Email: adeline.fong@accaglobal.com 

--BERNAMA