World recovery based on fragile evidence: survey

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KARACHI: The Association of Chartered Certified Accountants, in its Global Economic Conditions Survey, has said claims that the world s economy is recovering is based on fragile evidence. It has repeated its warning that world economic leaders should guard against complacency and not confuse less panic over the crisis with strong evidence that the recession is over everywhere. The ACCA s third quarter survey of 1,200 finance professionals in 92 countries shows that while more finance professionals now believe the downturn has bottomed out , they also believe that a reliable recovery is still unlikely to return before late 2010, more than a year away. Although business confidence continues to recover in the third quarter of 2009, those who saw improvements in conditions (31 per cent) are still outnumbered by those who had lost confidence (33 per cent). While increasing members (34 per cent) now believe that global economic conditions are either about to improve or are already improving, the emerging consensus, expressed by 44 per cent of respondents, appears to be that current conditions mark the bottom of the downturn and will persist for some time.

Nearly 40 per cent are reporting that their organisations income is unlikely to change over the next three months, with an equal number anticipating further losses of income, while only 22 per cent have seen their prospects improve. The survey also shows that as business incomes continue to decrease in the third quarter of 2009, there was a rise in late payment as well as supplier and customer bankruptcies. Investment in staff fell at an accelerated rate in the third quarter and investment in capital projects, which had previously shown signs of stabilising, seems to be weakening further. The figures also revealed dramatic differences in how finance professionals thought governments would react to the situation, with 77 per cent of respondents in Africa and 60 per cent in the Asia-Pacific region expecting increases in public spending, while 68 per cent of Western European respondents expecting spending cuts. Western Europe was the only region in which public spending was, on balance, expected to fall over the next five years.

Courtesy: The News


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