Economic recovery just a mirage on the horizon?

WHEN more accountants start worrying less about the economy, it may be a sign for the rest of the world to exhale too. Clouding the sunny horizon, however, are a few accountants who have chosen to hold their breath.

The fourth quarter Global Economic Conditions survey by the Association of Chartered Certified Accountants (ACCA) found 46 per cent of its members believe economic conditions are either about to improve or already have, an increase from 34 per cent who thought the same back in Q3.

A more telling sign of optimism is the number of respondents who now expect a recovery in less than 12 months - 18 per cent, compared with 13 per cent in the Q3 survey.

ACCA members in the Asia-Pacific region are among the most optimistic, with 60 per cent of the 441 respondents in the region believing global economic recovery is possible within 12 months or less.

'Unlike previous quarters, the latest survey records not only improving perceptions but fundamentally positive developments on the ground,' the report says.

But amid the cheer, there is also trepidation. A sizeable minority think the recovery will not come as readily as expected. And 11 per cent of them think the downturn will last three years or more.

For all the optimism, several key figures continue to flag. Thirty-seven per cent of respondents reported a scaling-down of investment in staff, while 33 per cent reported falling investment in capital projects.

These declines have been caused primarily by continued tight finance and fewer investment opportunities in the past three months, according to survey respondents.

Especially worrying for the rank and file, 17 per cent of respondents reported that their organisations or clients are making pre- emptive job cuts despite stable or rising revenue, up from 14 per cent in the Q3 survey.

As a harbinger of the expected slowdown in economic stimulus boosters, almost a third of respondents reckon government support for investment has decreased.

'While there are increasing numbers of finance professionals who are prepared to call the bottom of the recession, there is also an underlying sense of unease and concern about developments in the coming year,' said ACCA Singapore's country head Penelope Phoon.

'Many of our members are treating the recovery as a mirage - they can see it on the horizon, but it remains there, however much progress their organisations or their domestic economies might appear to be making.'

The survey, conducted throughout November, includes the responses of 1,700 ACCA members in 99 countries.

Source: Business Times, 29 Dec 2009