North America, Africa Lead In Economic Confidence Amid Trade War Fears

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KUALA LUMPUR, July 14 (Bernama) – The global economic recovery that started in late 2016 is starting to lose momentum, with global confidence in the second quarter (Q2) of 2018 dipping from its Q1 high.

This is according to the latest edition of the Association of Chartered Certified Accountants (ACCA ) and Institute of Management Accountants (IMA) Global Economic Conditions survey.

Although it remains high by recent standards, the slight fall in confidence reflects increasing fears of a trade war between the United States (US) and China. This continues to affect global outlook, with China’s economic sentiment falling sharply.

Despite this, North America remained the most confident region in the world in Q2 of 2018, with official data showing that the massive tax cut at the start of the year was leading to higher consumption in the US, while Africa was the second most confident region, sharing an optimistic outlook with North America.

Both regions are where the number of people expecting conditions to improve exceeded those who expected conditions to worsen. Central and South America was the least confident region.

The picture for the United Kingdom (UK) is in sharp contrast, where economic confidence plummeted in Q2, with figures being well below the historical average.

This finding aligns with the latest gross domestic product (GDP) data, which shows that the economy grew by just 0.2 per cent in Q1 of 2018. It also comes alongside 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.

ACCA head of Business Insights, Narayanan Vaidyanathan said: “The net dip in global confidence levels reflects factors such as fears of US-China trade wars more than compensating for other factors such as low employment and tax cuts in the US.

“The dip was seen both in the Organisation for Economic Cooperation and Development (OECD) and non-OECD countries, though confidence in both groups remains relatively high by historical standards.”

Meanwhile, IMA vice president of research and policy and professor-in-residence, Raef Lawson said: “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.”

He noted that there were marked differences between regions and countries, with concerns over the China-US trade war intensifying. These are uncertain times, and the Q3 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 looks likely.