|
|
The two bodies claim that the financial crisis and global recession have now fragmented into multiple unresolved issues - including damaged bank and government balance sheets, unconventional economic policies, political polarisation and geopolitical tensions. These are, by and, large, still present five years on, despite a growing ‘recovery consensus.’
In particular, the review highlights how, since mid-2012, business confidence gains have been much stronger in the financial sector than among the world’s SMEs and large corporates. While conceding the benefits of stronger banks on business investment, it warns of a growing imbalance fuelled primarily by central banks.
Manos Schizas, Senior Economic Analyst at ACCA, said: 'A recovery which is confined to the financial sector is not sustainable and policymakers need to start asking hard questions about what’s really underlying this in terms of consumer spending, business investment and leverage.'
The two bodies have also called on policymakers to take stock of the impact of unconventional monetary policy by OECD countries – particularly the unintended spill-overs into emerging markets.
Two of the world’s major economies – the EU and China – have driven much of the uncertainty over the past four years, but the ACCA/IMA heath-check is cautiously optimistic.
In the EU, the report finds that, despite mounting government debt, financial contagion has been contained, much of the missing institutional framework in the Eurozone is being built and the banking sector is on the mend. In China, despite repeated ‘doomsday’ warnings, slowing growth has so far remained manageable. However, the country is slowing down and shifting from an investment-driven to a consumption-driven economy, which will present a significant longer-term challenge for Chinese policymakers, and for countries which have tied their economic growth to commodity exports or direct Chinese demand.
The ‘health check’ of the recovery has shown that businesses around the world have been holding back on long-overdue investment for years, while austerity-hit public sectors have also often sacrificed public investment in order to maintain government consumption levels. The result has been a significant loss of productivity which will take years to reverse. ACCA and IMA believe, however, that a rebound in investment has already begun in 2013 and will be the biggest economic story of the next year, shaping industries for years to come. Access to finance has recovered consistently in most regions, businesses are increasingly seeking growth capital and it is mostly structural, rather than cyclical, factors that are holding up business financing.