The ayes have it. The global economy is in recovery mode after a disastrous 2008-09 financial crisis shuttered hundreds of banks and forced millions of people into unemployment lines.
For the first time since 2009, the optimists beat out the pessimists when it comes to questions of faith on the economic recovery.
According to the Global Economic Conditions Survey (GECS) released on Wednesday by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA), the optimists have outnumbered the pessimists for the first time in the survey’s history.
Business confidence has now reached levels last seen in the third quarter of 2010. The survey is a sentiment survey of 2,021 executives, including around 150 CFOs from companies worldwide. It was taken in August, before the government shutdown.
The results: 28% of respondents claim they were more confident about the prospects of their own businesses than they had been three months earlier, up from 26% in the second quarter. Nearly a third (32%) reported a loss of confidence, but that was down from 35% in the previous quarter.
While business confidence is still rising modestly, perceptions of the recovery are improving at a very rapid rate. A total of 53% in the third quarter now believe economic conditions are improving or about to improve, while the pessimists’ share is down from 50% in the second quarter to 43% in the third quarter.
Governments around the world are beginning to capitalize on the recovery, with respondents rating their economic policies higher again after a year of intense disapproval.
Well, at least that was before the fiasco in Washington. A Republican-led House of Representatives walked out of Congress the first week of October in protest of government spending and the Affordable Care Act.
The shutdown worries American business more than it does their European counterparts, though “there is a failure of governance on both sides of the Atlantic,” said Nemat Shafik Minouche, deputy managing director of the International Monetary Fund.
“We have seen from previous editions of the (survey) that the experiences of the debt ceiling and fiscal cliff crises was extremely negative,” said Emmanouil Schizas, ACCA Senior Economic Analyst and editor of the 20 page survey report.
“This suggests to us that investment could suffer as a result of the shutdown,” he said. Right now, small and mid-sized U.S. businesses are saying that — in the third quarter at least — banks have been more apt to lend. This positive sign could be dulled by the full impact of the U.S. government shutdown, which has yet to be felt.
“There is now a very real possibility that U.S. growth will fall below that IMF number of 2.6%,” said former Treasury Secretary Robert Rubin, who was seating beside Minouche during Tuesday’s Buttonwood Gathering event held by The Economist magazine in New York.
The U.S. vs. the World
After six months of strong confidence gains, U.S. respondents appeared only marginally more upbeat in the prospects of their organizations in the third quarter.
A total of 25% of respondents reported confidence gains and 31% reported losses – both figures practically unchanged since the last quarter.
After a year of diverging performance, business confidence in the regions converged once again, with continued gains in the South and North-East and losses in the Midwest and particularly the Mid-Atlantic, the survey showed.
From a macro perspective, the third quarter of 2013 marked a full year of consistently improving perceptions of the economy. A total of 57% felt that economic conditions where improving or about to do so, up from 55% in the second.
The strongest performers in the third quarter of 2013 have been markets in Europe, including the eurozone.
Following a prolonged credit crunch, businesses have taken advantage of the renewed access to finance in order to invest in capital and staff. In Europe, these developments have gone hand in hand with improved perceptions of the broader economic recovery taking place there.
“The E.U. is coming out of recession after two to three years and now they can go about fixing the banking system,” said a fairly bullish Bruce Richards, founder of the $10 billion hedge fund Marathon Asset Management in New York.
The Asia Pacific region lies at the other extreme of business fortunes. Here, business confidence is down, access to growth finance has tightened dramatically and business investment is beginning to fall, as a result of an investor exodus and deepening liquidity crisis that is testing the endurance of China’s banking sector and the businesses that depend on it, the survey report said.
Despite a rising tide of economic sentiment around the globe, respondents in this region felt that economic recovery was further out of reach in the third quarter of 2013.
The takeaway: the optimism for growth in the emerging world — particularly in the BRIC countries — is giving way to optimism for growth in the core economies, from Japan to the U.S. Optimism here translates to the physical economy as well.
Even if Rubin is right and the U.S. growing around 2% next year instead of the 2.6% the IMF forecasts, that beats the forecasted 1.6% growth rate for 2013.
Businesses are worried about interest rates rising, and don’t want to get the timing wrong as this low rate period may very well go down in the history books as the cheapest money the world’s ever seen.
Exporters are also worried about tapering because foreign buyers are being affected by foreign exchange volatility, as currencies sway to Fed announcements on QE.
For now, all eyes are on the fourth quarter to see the full impact the government shutdown has had on confidence in the economy as well as within businesses themselves, said Raef Lawson, the IMA’s vice president of research. Nevertheless, “optimism about the U.S. economic recovery remains,” Lawson said.
forbes.com
For the first time since 2009, the optimists beat out the pessimists when it comes to questions of faith on the economic recovery.
According to the Global Economic Conditions Survey (GECS) released on Wednesday by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA), the optimists have outnumbered the pessimists for the first time in the survey’s history.
Business confidence has now reached levels last seen in the third quarter of 2010. The survey is a sentiment survey of 2,021 executives, including around 150 CFOs from companies worldwide. It was taken in August, before the government shutdown.
The results: 28% of respondents claim they were more confident about the prospects of their own businesses than they had been three months earlier, up from 26% in the second quarter. Nearly a third (32%) reported a loss of confidence, but that was down from 35% in the previous quarter.
While business confidence is still rising modestly, perceptions of the recovery are improving at a very rapid rate. A total of 53% in the third quarter now believe economic conditions are improving or about to improve, while the pessimists’ share is down from 50% in the second quarter to 43% in the third quarter.
Governments around the world are beginning to capitalize on the recovery, with respondents rating their economic policies higher again after a year of intense disapproval.
Well, at least that was before the fiasco in Washington. A Republican-led House of Representatives walked out of Congress the first week of October in protest of government spending and the Affordable Care Act.
The shutdown worries American business more than it does their European counterparts, though “there is a failure of governance on both sides of the Atlantic,” said Nemat Shafik Minouche, deputy managing director of the International Monetary Fund.
“We have seen from previous editions of the (survey) that the experiences of the debt ceiling and fiscal cliff crises was extremely negative,” said Emmanouil Schizas, ACCA Senior Economic Analyst and editor of the 20 page survey report.
“This suggests to us that investment could suffer as a result of the shutdown,” he said. Right now, small and mid-sized U.S. businesses are saying that — in the third quarter at least — banks have been more apt to lend. This positive sign could be dulled by the full impact of the U.S. government shutdown, which has yet to be felt.
“There is now a very real possibility that U.S. growth will fall below that IMF number of 2.6%,” said former Treasury Secretary Robert Rubin, who was seating beside Minouche during Tuesday’s Buttonwood Gathering event held by The Economist magazine in New York.
The U.S. vs. the World
After six months of strong confidence gains, U.S. respondents appeared only marginally more upbeat in the prospects of their organizations in the third quarter.
A total of 25% of respondents reported confidence gains and 31% reported losses – both figures practically unchanged since the last quarter.
After a year of diverging performance, business confidence in the regions converged once again, with continued gains in the South and North-East and losses in the Midwest and particularly the Mid-Atlantic, the survey showed.
From a macro perspective, the third quarter of 2013 marked a full year of consistently improving perceptions of the economy. A total of 57% felt that economic conditions where improving or about to do so, up from 55% in the second.
The strongest performers in the third quarter of 2013 have been markets in Europe, including the eurozone.
Following a prolonged credit crunch, businesses have taken advantage of the renewed access to finance in order to invest in capital and staff. In Europe, these developments have gone hand in hand with improved perceptions of the broader economic recovery taking place there.
“The E.U. is coming out of recession after two to three years and now they can go about fixing the banking system,” said a fairly bullish Bruce Richards, founder of the $10 billion hedge fund Marathon Asset Management in New York.
The Asia Pacific region lies at the other extreme of business fortunes. Here, business confidence is down, access to growth finance has tightened dramatically and business investment is beginning to fall, as a result of an investor exodus and deepening liquidity crisis that is testing the endurance of China’s banking sector and the businesses that depend on it, the survey report said.
Despite a rising tide of economic sentiment around the globe, respondents in this region felt that economic recovery was further out of reach in the third quarter of 2013.
The takeaway: the optimism for growth in the emerging world — particularly in the BRIC countries — is giving way to optimism for growth in the core economies, from Japan to the U.S. Optimism here translates to the physical economy as well.
Even if Rubin is right and the U.S. growing around 2% next year instead of the 2.6% the IMF forecasts, that beats the forecasted 1.6% growth rate for 2013.
Businesses are worried about interest rates rising, and don’t want to get the timing wrong as this low rate period may very well go down in the history books as the cheapest money the world’s ever seen.
Exporters are also worried about tapering because foreign buyers are being affected by foreign exchange volatility, as currencies sway to Fed announcements on QE.
For now, all eyes are on the fourth quarter to see the full impact the government shutdown has had on confidence in the economy as well as within businesses themselves, said Raef Lawson, the IMA’s vice president of research. Nevertheless, “optimism about the U.S. economic recovery remains,” Lawson said.
forbes.com
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