Unemployment expected to rise, despite small signs of promise in COVID-19 fightback

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Unemployment expected to rise, despite small signs of promise in COVID-19 fightback

Wednesday, July 15, 2020

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ACCOUNTANCY experts say global unemployment is expected to increase sharply, despite economic confidence in quarter two showing small signs of recovery.

A worldwide survey of more than 1,000 senior accountancy practitioners found that confidence picked up by 2.5% to -40 after capitulating to a record low in quarter 1 with the world reeling from the COVID-19 fallout.

The survey highlighted an employment index fall of 13 per cent to a nine-year low of -55 points. This is likely to put jobs at risk, and represents a significant challenge for job seekers, businesses and governments around the world.

The report Global Economic Conditions Survey (GECS), jointly published by ACCA (Association of Chartered Certified Accountants) and IMA (Institute of Management Accountants), reveals:

- Global confidence recovered slightly from the record low reached in the quarter 1 survey;

- Optimism that recovery is in prospect in the second half of the year, notwithstanding the collapse in activity through the first half;

- Government spending expectations fell by more than 2.5 per cent compared to quarter 1;

- All regions globally will be affected by the expected unemployment rise.

Michael Taylor, chief economist at ACCA, revealed there was relatively little divergence in confidence between regions, owing to the global nature of the coronavirus economic shock.

He said: “Globally, orders and employment indices plummeted to record lows in the latest survey, consistent with the most severe recession in decades. By contrast, global confidence recovered slightly from the record low reached in the quarter 1 survey.

“Recovery in confidence from quarter 1 lows can be interpreted as optimism about economic prospects over the second half of the year. This is especially likely in Asia Pacific, which emerged first from lockdowns and where confidence rebounded strongly to its highest level in ayear.

“In other regions, such as North America and Europe, the recovery in confidence was modest but in stark contrast with the large fall in orders in both regions. But confidence fell further in Africa and the Middle East, in both cases to record lows.”

The report indicated the severity of the present global slowdown, looking specifically at the change in measured concern about customers and suppliers going out of business. Both these series had trended sideways at relatively low levels in recent years but shot up to record highs in quarter 2 — to 23 per cent for suppliers and 47 per cent for customers.

“Confidence in quarter 2 was a mixed picture, and globally there was a modest bounce from the record low in quarter 1. This unusual combination of very weak orders but slightly better confidence can be interpreted as expectations of a turning point – an unprecedented collapse in activity in the first half of the year to be followed by some degree of recovery in the second half,” said Raef Lawson, vice-president of research and policy.

Looking ahead, Taylor concludes: “Special COVID-19-related questions in this GECS show an overall 50-50 split between those expecting economic recovery in the second half of this year and those not expecting this until 2021.

“There may not be unity on when economic recovery is likely to take place, however a collective effort will be required to ensure a return to economic prosperity as quickly as possible.”


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