Global business confidence remains fragile despite Q2 uptick

The latest Global Economic Conditions Survey (GECS), released on July 22 by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA), reveals that confidence among accountants rose in the second quarter of 2025, its first uptick since the second quarter of last year. While the global confidence index hit its highest level since Q3/2024, sentiment across the profession remains fragile, with most indicators reflecting continued caution in the face of geopolitical and economic uncertainty.

Photo: ACCA

The survey showed modest declines in both the New Orders and Capital Expenditure indices. Although the New Orders index is holding at its historical average, capital spending remains slightly below trend – continuing patterns observed since the start of the Ukraine conflict in early 2022. In contrast, the Employment Index showed a mild improvement and is now close to its long-term average, suggesting continued resilience in labour demand.

Among major regions, North America saw a slight recovery in confidence, supported by improving sentiment in the US. However, overall levels remain weak by historical comparison. Western Europe also recorded a moderate increase, driven in part by a continued rebound in UK sentiment following a record low in late 2024.

Asia-Pacific, however, posted a sharp decline in confidence in Q2/2025, reversing gains from the previous quarter. The regional fall was led by a drop in new orders and employment sentiment, likely reflecting growing concerns over the impact of rising US tariffs and the outlook for global trade. Capital investment edged higher but remains historically subdued.

Jonathan Ashworth, chief economist at ACCA, noted that global growth remained relatively resilient in the first half of the year, despite the headwinds.

"While the key GECS indicators are not pointing to a global economy in robust health, neither are they signalling an impending downturn," he said. "That said, rising tariffs and mounting uncertainty will likely weigh on global growth momentum in the second half of 2025."

Alain Mulder, senior director for Europe Operations and Global Special Projects at IMA, added that cost pressures appear to be easing in some regions, albeit unevenly.

"North American respondents noted a slight reduction in operating cost increases, but the level remains elevated, raising the risk of further price adjustments by businesses in the months ahead," he said.

Mulder also warns that persistently high inflation could complicate monetary policy decisions by the US Federal Reserve if growth slows and labour markets weaken.

In a shift in priorities, geopolitical risk emerged as the top concern for accountants globally in Q2/2025, overtaking economic uncertainty and regulatory compliance, which were tied in second place. Talent shortages and cybersecurity risks, while still relevant, fell slightly in prominence. Climate change, fraud, and supply chain disruptions were ranked lower, suggesting that macro-level uncertainty now dominates boardroom agendas.

In the Asia-Pacific region specifically, the renewed deterioration in confidence underscores the region's vulnerability to rising protectionism and a slowing trade environment. The sharp rise in concerns about customer insolvency also mounts signals corporate stress, with financial professionals growing increasingly cautious.

The report concludes that while the near-term outlook is not dire, the accountancy profession, often a bellwether for broader economic sentiment, remains deeply aware of the risks posed by rising costs, political instability, and ongoing trade disruption.

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