In Asia-Pacific, the forward-looking New Orders Index improved for a second consecutive quarter in Q3 and now stands close to its highest level in the survey’s history, according to the Global Economic Conditions Survey (GECS) from the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA), published on October 21. The Capital Expenditure and Employment indices for the region also recorded decent gains and are now around their historical averages.
“Confidence among accountants in Asia-Pacific fell back materially, shedding almost three-fifths of its huge Q2 increase, although it remains just above its long-term average. Globally, confidence declined only slightly. The fall in the region may reflect renewed Middle East tensions and the rebound in energy prices, but the key indicators generally point to a constructive picture. The resilient US and global economies are supportive, and several countries in the region are important beneficiaries of the global AI boom, with robust investment in the US fuelling surging exports from Asia-Pacific,” the report said.
Geopolitical instability is the top risk priority for finance professionals in Asia-Pacific, ranked first by 24.1 per cent of respondents in the region, compared with 18.4 per cent globally, where economic pressures lead at 24.4 per cent. Talent and skills concerns (14.9 per cent versus 10 per cent globally) and supply chain disruption (9.2 per cent versus 6.6 per cent) are also ranked first more often in Asia-Pacific than worldwide. Several respondents in the region described how climate change could disrupt supplies and services.
“Asia-Pacific’s key indicators appear quite encouraging, with the region being a major beneficiary of the global AI investment boom. Downside risks remain though, including a further large rise in energy prices and what is expected to be an extremely powerful El Niño weather effect. Anything that fuelled a meaningful slowing in the AI boom would also clearly be problematic,” said Jonathan Ashworth, chief economist, ACCA. “While the global economy has shown remarkable resilience this year, downside risks remain prevalent. The longer energy and other prices remain elevated, the greater the pressure on firms to pass on their cost increases, which would weigh on consumers and increase the likelihood of further rate hikes by the major central banks.”
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| Jonathan Ashworth, chief economist, ACCA. Photo: ACCA Vietnam |
According to the report, cost pressures remain a concern for businesses in the region. 62 per cent of Asia-Pacific respondents reported increased operating costs in Q3, down from Q2 but still meaningfully above the series average of 52 per cent.
Resilient economic activity and elevated cost pressures may increase pressure on the region’s central banks to tighten policy: 41 per cent of respondents expect interest rates to rise in their country over the next three months, up from 24 per cent in Q1 and 30 per cent in Q2.
Globally, the survey points to a resilient economy, although downside risks are growing amid the renewed rise in energy prices and inflation, large increases in government bond yields, and tighter monetary policy. Almost 70 per cent of accountants worldwide reported increased operating costs in Q3, and almost 50 per cent expect interest rates to rise in their country over the next three months, up from 42 per cent in Q2.
“There is something of a tug of war going on in the global economy at the present time, with the AI boom a major driver of growth and stock markets, while higher energy prices, inflation and government bond yields are pulling in the other direction. Further significant gains in energy prices and government borrowing costs would be increasingly challenging for global growth,” said Alain Mulder, senior director, Europe Operations & Global Special Projects at IMA.
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