Global Economy Running out of Steam, say Accountants

Fundamental Weakness of the Recovery "Plain for all to see" as Downside Risks Recede and Governments Withdraw Support

LONDON, March 30, 2010 - The global economic recovery has run out of steam, reveals ACCA's (the
Association of Chartered Certified Accountants) latest Global Economic
Conditions survey, with confidence taking a hit and a return to solid
economic growth moving further away.

This is despite important improvements in conditions on the ground across
most of ACCA's risk indicators - especially the outlook for employment and
investment - and even modest gains in the popularity of government actions to
deal with economic turbulence.

Helen Brand, chief executive of ACCA, says: "These are sobering findings
from our global network of members. It is good news that fewer businesses are
making staff redundant, becoming insolvent or having trouble accessing
finance. But none of this translates to more business confidence or optimism.
While accountants are breathing a sigh of relief, there is nothing to cheer
about."

ACCA's findings suggest that past confidence gains have eased especially
among accountants in Asia-Pacific and Africa, the two regions leading the
recovery. These now report fewer profitable opportunities for their
organisations as consumption in debt-laden wealthy countries refuses to keep
up and governments roll back their support for businesses.

The key findings reveal:

    - 23 per cent of respondents believe that the global economic
      outlook is improving, up slightly from 21 per cent in the last quarter
    - 39 per cent say that we are at the bottom of the cycle and will
      stay there for some time to come
    - Respondents who believe that the global economic outlook is
      improving or about to do so are still outnumbered by those who think it
      is deteriorating or stagnating
    - Business confidence levels have also eased. Only a third now
      report any business gains at all, while 28 per cent report losses of
      confidence. Only 29 per cent of respondents adjusted their expectations
      of their organisations' incomes upwards in the first quarter of 2010,
      down from 32 per cent in 2009.
    - Accountants have adjusted their views about the duration of the
      recovery - only 15 per cent now believe the recovery has less than a
      year to run, down from 18 per cent in late 2009.

Although one in two respondents predicted that the global economy would
return to stable growth in one year or less, down marginally from late 2009,
ACCA has also noticed a steady rise in the percentage of extreme pessimists -
those expecting a recovery in three years or more - which now stands at 11.4
per cent, up marginally from last quarter.

REGIONAL FINDINGS

The findings of the Q1 2010 survey suggest further divergence in the
economic trajectories of the world's regions.

Western Europe

Despite some improvement in members' economic outlook, Western Europe
continues to languish behind the rest of ACCA's regional markets across most
of ACCA's measures.

A full 50 per cent of respondents here believe we are at the bottom of
the downturn and will stay there for some time yet, while only 12 per cent
believe things are getting better - this percentage is nearly four times as
high in Africa and Asia. Expectations of the timing of the recovery have been
improving very slowly since last May, with 51 per cent of respondents now
expecting a return to stable growth in 1 year or less, while confidence has
fallen marginally, with 31 per cent of respondents reporting a loss of
confidence, against 29 per cent who reported gains in confidence.

Central and Eastern Europe

The economic outlook in Central and Eastern Europe has finally bottomed
out in early 2010. Forty-eight per cent of respondents in the region now
believe that economic conditions are about to improve or already doing so,
while an equal number believe they are deteriorating or stagnating.

This, however, disguises the true levels of optimism in the region:
accountants here expect a quicker recovery than their colleagues anywhere
else in the world, with a full 54 per cent predicting a return to stable
growth in one year or less. Hence gains in business confidence have been
sustained for another quarter, while income expectations are stable.

Africa

This is the only region left where respondents still report an
accelerating net improvement in economic conditions. A full 79 per cent
believe conditions are about to improve or already doing so. These
perceptions are, however, accompanied by easing income expectations (46 per
cent revised expectations upwards in Q1 2010 - 50 per cent did so in Q4 2009)
and forecasts of a long and weak recovery - 45 per cent of respondents expect
a return to stable growth in two years or more.

Asia Pacific

In the Asia-Pacific region, the pace of recovery, while brisk, appears to
have levelled off in almost all respects and business confidence has eased
significantly. Just under two thirds (64%) of respondents believe conditions
are about to improve or already doing so. Alarmingly, respondents here have
been reporting a slowing recovery for many months. Only 27% expected a return
to stable growth in two years or longer in September 2009; 40% did in
February 2010. Moreover, members here have reported the first net fall in
government support for investment since such measurements began.

These ominous signs could be accompanied by returning inflation. In the
Asia-Pacific region, the share of respondents reporting rising operating
costs has risen in every quarter since these surveys began, and jumped from
24 per cent to 36 per cent in the three months to February 2010.

North America

The recovery in North America picked up pace in early 2010, with economic
indicators finally crossing into positive territory. 56 per cent now believe
that conditions are other improving or about to do so, against 43 per cent
who think they are deteriorating or stagnating.

Accountants in the region are evenly split between those who expect a
quick (one year or less) and those who expect a slow recovery (two years or
more). This means that the region expects a slower recovery than most of the
rest of the world, with only accountants in Africa being more pessimistic

Income trends appear to be unchanged - incomes are still falling
slightly, with 30 per cent saying their organisations were negatively
affected. Confidence trends are similarly negative but stable.

Notes to Editors

About ACCA's Global Economic Conditions report:

    - The fifth ACCA Global Economic Conditions Survey was carried out
      between 9 and 28 February 2010.
    - It is based on 1,361 responses from professional accountants
      in 95 jurisdictions around the world.

- The report is available from
www.accaglobal.com/pubs/economy/analysis/acca/technical_papers/tech-
ms-gec05.pdf

(Due to the length of this URL, it may be necessary to copy and paste
this hyperlink into your Internet browser's URL address field. Remove the
space if one exists.)

1. ACCA is the global body for professional accountants. We aim to offer
business-relevant, first-choice qualifications to people of application,
ability and ambition around the world who seek a rewarding career in
accountancy, finance and management. We have 393,000 students and 137, 200
members in 170 countries worldwide.

2. ACCA has worked with governments, national organisations and
development agencies in emerging economies- for over 20 years - promoting the
accounting profession, to create value for the communities, businesses and
individuals it serves.

3. ACCA believes that globalisation of business means that one set of
reporting standards is essential. We favour the principles-based IFRS.

4. ACCA understands the real issues facing small businesses as 63,000 of
our members work in SMEs or small partnerships worldwide.

    For further information, please contact:
    Hannah Smith, ACCA Newsroom
    +44(0)20-7462-8900
    hsmith@ruderfinn.co.uk

For further information, please contact: Hannah Smith, ACCA Newsroom, +44(0)20-7462-8900, hsmith at ruderfinn.co.uk