The global economic recovery that started in late 2016 is starting to lose momentum, with global confidence in Q2 dipping from its Q1 high, finds the latest edition of ACCA (the Association of Chartered Certified Accountants) and IMA Global Economic Conditions survey.
North America remained the most confident region in the world in the second quarter, with official data showing that the massive tax cut at the start of the year is leading to higher consumption.
In sharp contrast is the UK, where economic confidence plummeted in Q2, with figures now well below the historical average.
For the UK, this finding aligns with the latest GDP data, which shows that the economy grew by just 0.2% in the first quarter of 2018. There are also worrying signs that the UK is struggling to come to an agreement with the rest of the European Union on the terms of its exit from the bloc.
Narayanan Vaidyanathan, Head of Business Insights at ACCA says: ‘While bad weather might have been blamed in part for the sharp drop in GDP growth in the first quarter to just 0.1% quarter on quarter, the underlying uncertainty over the outlook of the Brexit negotiations looks to be weighing on prospects. Clearly these concerns were reflected in our survey.’
Raef Lawson, IMA vice president of Research and Policy and Professor-In-Residence adds: ‘Our Q2 analysis mirrors other data that the global economic recovery has slowed since the start of the year. However, confidence is still high by past standards, and a sharp slowdown in economic growth is unlikely in the months ahead. The differences between regions and countries shows marked differences, with concerns about the China-US trade war intensifying – these are uncertain times, and Q3’s results will be heavily impacted by the decisions made in the Whitehouse about tariffs.’
Looking ahead, ACCA and IMA’s research shows that the outlook for the global economy remains positive – despite signs that economic growth in some key parts of the world’s economy has slowed since growth reached a peak in the second half of 2017. The report concludes that while the global economy is likely to remain pretty strong over the next year, a modest slowdown is likely.
The GECS report can be found here.