Business confidence falls again as real economy takes a hit

KINGSTON St. Vincent, December 6th, 2012  --  Business confidence falls again as real economy takes a hit, reveals global survey of finance professionals. More than half of Caribbean respondents believe the global economic recovery is not on track according to the latest Global Economic Conditions Survey.

Confidence in the global economy fell in Q3 2012 according to a worldwide survey of 2,500 finance professionals. 67% of respondents now believe that the global economy is stagnating or reversing.

Further analysis suggests that this latest fall in global confidence is due almost entirely to changing business fundamentals – such as demand, access to finance, prompt payment and inflation - as opposed to respondents’ sentiment. Globally, the downturn is firmly focused on the real economy with small and medium sized enterprises being the worst hit.

The 15th edition of the quarterly Global Economic Conditions Survey (GECS) undertaken by ACCA (Association of Chartered Certified Accountants) and IMA (the Institute of Management Accountants), shows that for the Caribbean only 15 per cent of respondents reported confidence gains, against 40 per cent who reported losses. Just under a third (32 per cent) believed the global economic recovery was on track, while 62 per cent did not. Both measures of economic optimism were exactly in line with the average in non-OECD countries.

Brenda Lee-Tang, head of ACCA Caribbean, said: “The Caribbean has seen much instability, like the rest of the world, with economic conditions. But the islands have seen tourism boosts and growth in the oil and mining industries, which has seen government investment in the infrastructure of those countries.

“Being in close proximity to the US, this region is heavily influenced by the American economy and so to the effects of its sluggish recovery.”

One theme that emerges strongly from the survey is the interconnectedness of the global economy. Raef Lawson, IMA’s Vice President of research commented: “The slowdown in Asia; the Eurozone debt crisis; and the sluggish U.S. recovery all are feeding into each other and no region is unaffected. In fact, the degree to which movements in the GECs indices are synchronized between regions is uncanny.”

Survey editor Manos Schizas, Senior Economic Analyst with ACCA said: “This quarter has seen business confidence fall for all the right reasons. Around the world, and with few exceptions, the fundamentals of the business environment are deteriorating, and businesses are once again having the kinds of liquidity problems we thought we had put behind us.”

The Caribbean picture in detail

• Much of the tone for the third quarter in the region was set by the countries’ relations with the International Monetary Fund (IMF).

• Jamaica was unable to reach an agreement with the Fund that would release IMF loans, which in turn led to a sharp reduction in government spending. The prolonged uncertainty leading up to this (including the delaying of the Budget) hit investor sentiment and business confidence hard, while wage freezes have had an effect on demand.

• Meanwhile, currency devaluation has driven up fuel prices in Jamaica, driving up fuel prices. Officials in Barbados spent much of the third quarter of 2012 denying that they were going to seek IMF support or devalue the dollar.

• Tourism and commodities, the region’s main exports, have generally grown. According to respondents, tourism rose in Bermuda but fell in Barbados. Guyana’s mining sector and Trinidad and Tobago’s oil industry have been expanding and both governments have ploughed some of their proceeds into investments in infrastructure.

*************************
  DISCLAIMER
  
 
This article was posted in its entirety as received by SKNVibes.com. This media house does not  correct any spelling or grammatical error within press releases and commentaries. The views expressed therein are not necessarily those of SKNVibes.com, its sponsors or advertisers