By Lee Wei Lian
The Malaysian Insider
Oct 17, 2011

KUALA LUMPUR, Oct 17 — The largest-ever global survey of finance professionals by the Association of Chartered Certified Accountants (ACCA) shows that all signs of the global economic recovery have disappeared.

The confidence level in Malaysia also deteriorated markedly in the survey as out of 222 finance professionals who responded in Malaysia, only eight per cent reported confidence gains, down from 20 per cent in the last quarter, and 77 per cent believe the global economy is either stagnating or deteriorating compared with 54 per cent.

In terms of the global outlook, three-quarters of the 2,873 professionals who took part in the Global Economic Conditions Survey between August 19 and September 7, 2011 thought global economic conditions were deteriorating or stagnating.

The ACCA’s global business confidence index returned a reading of -34 for the third quarter of 2011, down from -8 in the previous quarter.

It said that based on past observations, a reading lower than -14 should indicate that the developed world is slipping into negative growth.

Nearly half or 49 per cent of respondents meanwhile had lost confidence in the economic prospects of their own organisations, while 45 per cent thought their governments were not dealing correctly with current economic challenges.

ACCA country head Jennifer Lopez said the pessimistic outlook on the future was understandable given how inter-connected the current world economy is and the persistence of the economic crises in the Eurozone and the US.

“Having led the global recovery in 2010, there are high expectations that Asia will continue to do so,” she said in a press release today. “Unfortunately, a lot about the economy is psychological and the gloom and doom sentiment in the West has clearly made an impact in Malaysia.”

The ACCA said however that much of the drop in confidence, especially in Europe and the Asia-Pacific region, is down to a flow of bad news rather than the economic fundamentals, which have deteriorated only slightly in the past three months.

Manos Schizas, senior policy adviser with the ACCA and survey editor, said that the weakening in demand and deteriorating access to finance reported by accountants were not sharp enough to justify the strong negative sentiment which they expressed.

He added however that after taking into account the effects that fear for the future will have on their views, the evidence still points to falling economic activity in the developed nations and a sharp slowdown in emerging economies.

“Now more than ever, it is important to look beyond the extreme sentiments and focus on the economic fundamentals,” said Lopez.

Malaysia was in the middle of the pack when it came to the ACCA’s confidence index at 47.7 per cent, which was better than Singapore and Hong Kong at -55.6 and -50.4 per cent respectively but worse than Australia and the UK at -34.9 and 40.8 per cent respectively.

The Malaysian Institute of Economic Research (MIER) last week cut to 4.6 per cent, from 5.2 per cent, its projection for the country’s economic growth this year, citing a sliding global economy that it said could hurt exports.

While the Najib administration has projected a growth rate of 5-6 per cent for 2012, many research houses have downgraded their growth outlook to between 3-5 per cent.

RHB Research Institute said last week that Malaysia’s economic growth could slow to just 3.6 per cent next year, from a projected 4.3 per cent this year due to the increasing risk of a double dip global recession.

Bank of America Global Research predicted Malaysia’s GDP to grow at 4.2 per cent in 2012 while Maybank Investment Bank said it expected Malaysia’s GDP to expand at between 3.5 and four per cent, and CIMB Investment Bank forecast a GDP growth of 3.8 per cent next year.