Irish Economic Confidence Up 20%
Accountancy experts say Irish economic confidence in Q4 has bounced back after capitulating in the previous quarter. A survey of more than 80 senior accountancy practitioners on Irish economic conditions, who reflect the outlook of approximately 10,000 small businesses they advise, found that confidence had picked up by 20.5% to -17, after tumbling to a record low of -58 in the previous quarter.
The report Global Economic Conditions Survey (GECS), jointly published by ACCA (the Association of Chartered Certified Accountants) and IMA® (Institute of Management Accountants) reveals global confidence is below its long run average and the message is continued modest expansion in the world economy early in 2020.
Michael Taylor, chief economist at ACCA, highlighted Ireland’s domestic performance as giving the country’s economy a significant boost. “The Irish economy is buoyant against a global economy facing a sharp slowdown in global trade,” he said. “In key domestic areas, the economy is holding up well. Notably in the housing market and agriculture. Unemployment is close to a 13-year low at 4.8% in December – the GECS employment index points to continued buoyancy in the labour market.”
Michael Taylor continued: “The year ahead will be crucial, notably as the UK and the EU negotiate a post-Brexit trade agreement – Ireland being the most exposed EU economy to the UK. It would be very positive if a free trade agreement was reached in what is a tight timescale. ACCA maintains a no-deal Brexit would harm Ireland more than any other EU country, given its trade integration with the UK economy.”
Key global messages from the survey include:
- The possibility that suppliers could go out of business was a worry for just over 10% of respondents;
- The proportion concerned about customers going out of business fell slightly to 22% but remains close to a five-year high;
- Orders declined in some areas such as the UK and Middle East and increased in others especially Africa and Central and Eastern Europe;
- For the first time since Q2 2018 the US orders index increased, an encouraging pointer to US growth early in 2020.
Michael Taylor said of the global results: “Last year the global economy expanded at close to 3%, the slowest rate since the financial crisis ten years ago. The GECS foreshadowed this slowdown which continued steadily throughout last year. Looking ahead the GECS points to steady growth early in 2020, with no strong pick up but no global recession either.”
He concluded: “Many risks to the global economy in 2020 are the same as in 2019, including trade tensions between the US and China, which were a major cause of slowing global growth. Recent developments in this area have been positive, but risks of a re-escalation with renewed tariff increases remain. The Middle East is the current focus of geopolitical risk although the potential for conflict here to hurt the global economy through a surge in oil prices is much reduced.”
Commenting on the report, Caitriona Allis (pictured), Head of ACCA Ireland, said: “ACCA’s Global Economic Conditions Survey for Q4 2019 reflects an upbeat business sector with sustained growth being predicted of 3.5% by the Economic and Social Research Institute (ESRI) and more certainty around the Brexit process with the potential of a no deal Brexit diminishing. This is good news for Ireland and with challenges to international trade and a global economic slow-down expected in 2020, a strong and robust local economy with continued export growth positions us well to weather those storms”
Raef Lawson, Ph.D., CMA, CPA, IMA vice president of research and policy, commented: “There are downside risks to the economy, the main one being a re-escalation of US-China trade tensions. But on the upside last year’s monetary easing by the US Federal Reserve and many other central banks will support growth in coming months. It is also of course a US presidential election year, which often coincides with a buoyant economy. To sum up, a global recession is very unlikely but it will be another year of sluggish growth.”
GECS Q4 2020 can be found online at: https://www.accaglobal.com/gb/en/professional-insights/global-economics/GECS_Q4_2020.html
