With the notable exception of China, expectations about government spending fell around the world in the third quarter.
The world’s other economic giant – the US- continues to cast a long shadow.
While the strength of the US dollar was undermining the competitiveness of US exporters, the decision to push back the start of its tightening cycle, possibly to next year, has given some respite to emerging market currencies at the start of the fourth quarter.
“This latest GECS report shows signs that the recovery in the U.S. could be faltering, with exports, manufacturing, and employment growth underperforming. While there was a dip in confidence, underlying economic conditions still look reasonably strong and improvement looks likely over the coming quarters,” said Raef Lawson, Ph.D., CMA, CPA, IMA vice president of research and policy.
Western Europe remains more robust in terms of confidence, with the European Central Bank’s quantitative easing programme driving a recovery in bank lending across the region.
There is also a view that the Greek crisis is over for the time being, along with a belief that the euro-zone as a whole is better placed to cope with the fallout of a ‘Grexit’, should it happen.
The positive news is that some improvement in global business confidence looks likely in the last quarter of the year, with business conditions continuing to improve. But as the report warns, there is no shortage of potential threats to the global recovery.
Faye Chua, Head of Business Insights with ACCA said: “ Finance professionals around the world cannot help but to have been affected by the combination of poor data, financial turmoil, falling commodity prices, along with concerns over the two leading economies of the US and China during this quarter. While the global economy is currently built on volatile ground, there are some causes for optimism – with forecasters expecting a rise in global growth next year. But finance professionals will still need to be prepared to steer companies of all sizes through some difficult issues, given how quickly storms have developed in the global markets during recent weeks.”
