Global economy set for weak growth for the rest of 2022, survey finds

The worldwide economic growth is expected to be weak for the rest of the year 2022 says the latest Global Economic Conditions Survey (GECS) by ACCA (the Association of Chartered Certified Accountants) and IMA (Institute of Management Accountants). This report further indicates that economic confidence among finance professionals and accountants in North America has fallen back to levels seen during the height of the Covid-19 pandemic in 2020, while the Asia Pacific and South Asia also witnessed a dip following a rise in the previous survey.

The Q2 Global Economic Conditions Survey (GECS) witnessed a decisive deterioration in the global economic outlook with all the main global indicators dipping due to effects of the ongoing geopolitical issues and the spike in inflation levels across much of the world.

“The drop in global confidence is especially sharp, although the level remains above the low point reached at the height of the Covid-19 pandemic. Indicators more closely related to economic activity – orders, employment and capital spending, also fell in Q2 but more modestly than confidence. The conclusion from this GECS is that, while the risks of a global recession have risen, the most likely outcome is one of weak growth for the rest of this year,” the report added.

While there has been a sharp fall in confidence among financial professionals, the global confidence level has managed to remain above the low point reached the height of the Covid-19 pandemic. As far as the apprehensions of the financial professionals are concerned, worries over Covid-19 have now been replaced by inflation and rising interest rates, while supply shortages and supply chain issues have remained the highest ranked risk in the third GECS in a row.

The report stated that the steepest fall in confidence was observed in the Middle East, owing to its high exposure to trade with Russia and Ukraine, two nations that have been at war since February. North America and Western Europe on the other hand recorded significant dips due to soaring inflation levels in recent months. 

“Only in North America has confidence fallen back to levels seen during the height of economic uncertainty in 2020. Elsewhere, the falls in confidence were still significant, but more modest,” stated the report.

As per the survey, the falls in confidence and orders in South Asia were broadly in line with the global average for the quarter. It added, “In India, the region’s largest economy, the central bank has raised interest rates from 4 to 4.9 per cent since May as it grapples with inflation which is rising towards 7 per cent. Throughout the region, the price of key imports such as fuels and edible oils have increased sharply in the wake of the war in Ukraine. The aftermath of the pandemic and war will be a significant increase in the numbers living in extreme poverty".



ALSO READ:  Cabinet enhances ECLGS scheme for travel, hospitality sector by Rs 50,000 cr