Mixed confidence trails global businesses
Mrs Oluwatoyin Ademola,
Currency volatility, costs worry African operators
The global business confidence has picked up at 12-month high, but in Nigeria and other African countries, currency volatility and increasing costs are causing great concern among business operators.
The latest Global Economic Conditions Survey (GECS) from the Association of Chartered Certified Accountants (ACCA) and Institute of Management Accountants (IMA) showed that while global businesses put together are hopeful, more operators in the continent are expecting the worse.
GECS is the largest regular economic survey of accountants around the world, which tracks good predictors of Gross Domestic Product growth in themed countries, including top companies and chief financial officers.
The pointed out that improvements in confidence, the world is yet to see it translate into a meaningful boost to hiring and investment, as only 19 per cent of firms are considering hiring new staff, and only 14 per cent were looking at opportunities to invest in new technology, while in every region, there were more businesses planning to sack workers.
The Head of ACCA Nigeria, Toyin Ademola, noted that the two factors that have accounted for the dampening business confidence in Africa are the slump in commodity prices, which has hit export incomes, government revenues and investment of the dependent nations.
“The second is economic mismanagement in the region’s two biggest economies, Nigeria and South Africa, which has caused growth to slow sharply in both countries. Corruption and political instability have dragged down economic confidence, damaging investment in both countries. In general, two very significant issues to manage in Africa are exchange-rate volatility and rising costs.”
According to the report, more respondents in Africa (56 per cent) said that currency volatility is causing them problems than those in any other region, with associated increasing costs, as currency depreciation pushes up cost of imports.
However, business confidence in the United States improved for the third quarter in a row and is now at its highest level since second quarter of last year.In Europe, fears that headwinds from the UK vote to leave the European Union in June could spread to the global economy have not been realized and this has raised confidence among businesses.
With protectionist sentiments on the rise across many nations, including Nigeria, the November presidential election in U.S. could have a significant impact on whether this improving confidence translates into genuine increases in employment and investment.
The Head of Business Insights at ACCA, Faye Chua, said the survey highlighted the importance of governments supporting growth and their increasing realisation of the limits of monetary policy.
“Over 51 per cent of respondents expected government spending to rise, which has driven global business confidence to the highest point in over a year. “After years of reduced investments in most Western economies, a combination of falling budget deficits and bond yields is encouraging governments to reach for their wallets. This is good news for business in a continued depressed climate for investment and hiring,” he said.
The Vice President, Research and Policy, IMA, Dr. Raef Lawson, noted that there are signs of improvement not just in the U.S., but in significant economies, including Brazil and Russia.
“North America is performing strongly in contrast to most other regions, helped by strong employment growth in the U.S. and recovering oil prices fuelling a buoyant mood in Canada with respect to construction and investment,.
“Meanwhile, confidence in China is at its highest level since 2012, which has had an uplifting effect on many emerging markets. Even Brazil, which has been in deep recession for several years, and Russia are showing tentative signs of improvement,” he said.
Related
Get the latest news delivered straight to your inbox every day of the week. Stay informed with the Guardian’s leading coverage of Nigerian and world news, business, technology and sports.
0 Comments
We will review and take appropriate action.