By Chioma Obinagwam
The Association of Chartered Certified Accountants (ACCA) has said that most businesses were less optimistic in first quarter(Q1) 2016 than at any other time in the past four years.
The latest Global Economic Conditions Survey from ACCA and Institute of Management Accountants (IMA), showed that more than half of firms are either cutting or freezing employment, while only 14 per cent are increasing investment in staff.
Responding to the survey, Toyin Ademola, Country Head ACCA Nigeria said,
“Take North America out of the equation and the economic picture painted by this survey isn’t a pretty one. Emerging markets are besieged. Revenues for commodities firms have collapsed since mid-2014. And business confidence in China has fallen to its lowest level since our records began.”
“Almost half of businesses reported a drop in income in Q1. As a result, every region except North America saw a jump in the number of businesses cutting capital expenditure. With emerging economies continuing to struggle with low commodity prices and many businesses on a spending lock down, the outlook for the global economy is becoming increasingly gloomy,” she continued.
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She stated that in Q1, 55 per cent of businesses said they had become less confident about the outlook and noted that it is well above the global average of 48 per cent.
She added that more firms in Africa than anywhere else were cutting investment in capital projects.
The continent is also the region where businesses have the biggest problems with rising costs and foreign-exchange movements, with many of the region’s economies suffering sharp falls in their currencies in recent quarters,” Ademola said.
She noted that the challenge is bringing businesses that have stopped hiring as a result of drop in income, to the point where they are confident enough to start hiring.
“Once income begins to drop and businesses stop hiring, getting them to a point where they are confident enough to begin doing so again is difficult – but vital,” Ademola noted.
Notwithstanding the recession, Ademola noted that the current economic realities have also had a positive impact on most African economies, which has translated to an increase in economic diversification in African economies and continuous development of regional integration.
“This could provide good reason for optimism in the mid and long-term,” she opined.