Global Economic Conditions: Q1, 2016

global model clock with Euro banknotes

Global economic situation continues to dominate business and political life. News and debates on economic issues are almost constantly the focus of media attention. Recent global economic conditions survey (GECS) report showed that:

  • In Q1 businesses were less optimistic about their prospects than at any other time in the past four years. Almost half of the firms surveyed said that they were more pessimistic about their prospects than they were three months earlier. Less than one quarter had become more optimistic.
  • More than half of firms are either cutting or freezing employment, while only 14% are increasing investment in staff. As many as 42% of firms are cutting back on investment, up from 40% in Q4 2015. Almost every region saw an increase in the number of businesses cutting capital expenditure last quarter, with North America the most notable exception.
  • The number of firms that reported a drop in income in Q1 rose to 48%, compared with 46% in the final quarter of 2015. Declining income is now comfortably the biggest problem facing businesses. By the same token, only 12% of businesses saw an opportunity to increase their orders as a result of changes in the global economy last quarter.
  • Firms in emerging-market economies remain very gloomy about their prospects. That said, business confidence across non-OECD economies did pick up slightly in Q1, led by Central & Eastern Europe – and Russia in particular. China was a notable exception. Business confidence there fell to its lowest level since Q4 2011.
  • Businesses confirm, in OECD economies dipped sharply last quarter. However, concerns over the UK exiting the EU look largely to blame, with confidence in the UK – at its lowest level since Q2 2012 – dragging down the average for Western Europe. Business confidence in the US actually improved last quarter, albeit from a low level.


The main indices of the survey are good predictors of GDP growth in the OECD countries and daily trend deviations correlate well with the VIX or ‘fear’ index, which measures expected stock price volatility. For complete survey by ACCA and IMA, please click here.