President Anthony Carmona has deferred his response to questions now in the public domain relating to issues at President’s House. His response will be given on Wednesday.
Business confidence in the Caribbean grew in the second quarter, according to the largest regular economic survey of finance professionals around the world.
The latest findings of the Global Economic Conditions Survey organised by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA) showed 23 per cent of respondents reporting confidence gains, up from 14 per cent in the previous quarter, with 29 per cent—ten per cent less than the previous quarter—reporting a loss of confidence.
The rise in business confidence has mostly been down to improving cashflow and demand, which became significantly stronger in the latest quarter. These are now at their healthiest in two years, while prices and exchange rates stabilised slightly and business opportunities remained resilient after falling for nine consecutive months.
Access to growth capital rebounded slightly in the second quarter, even though it remains subdued after more than year or slow decline, and opportunities for growth remained very rare. As a result, business capacity building rebounded in the second quarter of 2014.
Manos Schizas, senior economic analyst for ACCA said: “Looking forward, the macro-economic outlook for Caribbean economies has improved slightly, although it remains far from upbeat.”
The survey found that 45 per cent of respondents in the Caribbean are now optimistic about the shape of their national economies, up from 42 per cent previously, while the pessimists make up 52 per cent of the sample, down from 53 per cent previously.
Globally, the economic recovery has once again run out of momentum, according to GECS. Business confidence fell marginally in Q2 2014, and is becoming increasingly reliant on financial stability. The two bodies believe that this is a sign of mounting risks for the future of the recovery.
Although the change in business confidence between Q1 and Q2 2014 is statistically negligible, this apparent stability is the result of dwindling business opportunities and an improving investment environment cancelling each other out, according to the report’s findings.
The survey shows that there is growing business dynamism around the world, with North America and South Asia leading the charge in terms of capital spending, new orders and headcount. Conversely, Africa and the Middle East fared worst, with all three areas either falling or stable.
Overall, most of the world’s confidence boost appears to be coming from North America, as well as a temporary rebound in Central and Eastern Europe, but improvements in these regions were balanced out by receding optimism throughout Asia, Western Europe, Africa and the Middle East. Post-Taper, emerging markets are still underperforming in crucial areas such as access to growth capital, but the gap between them and the more developed markets is now narrowing.
One positive sign for the Asia Pacific region and beyond is that China’s prolonged slowdown is now starting to bottom out, which should be good news for a range of suppliers and commodity producers worldwide.
On a country-by-country basis, it is clear that much of the recovery in business confidence is temporary. For instance, encouraging figures in China and Russia were boosted by the signing of a series of major long-term trade and investment deals, while fieldwork closed before the loss of flight MH17 and its aftermath, which will certainly depress confidence in Central and Eastern Europe in Q3.
Despite relatively good news from the real economy, the survey also revealed that the first half of 2014 had been a very depressing time for major Western banks, and became more so in the second quarter. GECS figures for large financials in the US and Europe suggest that confidence in the sector retreated sharply in anticipation of tougher stress tests, rising interest rates and falling property prices, geopolitical risks and the threat of tougher regulatory enforcement.
Manos Schizas said: “After a year of solid improvement in 2013, it’s clear that 2014 is not going to be anywhere near as benign for the global economy. Many of the sources of good news in 2013—including large financials and ‘austerity survivors’ such as the UK and Ireland—are turning negative again. The Chinese slowdown, which has been a constant drain on the global recovery, may be coming to an end, but the looming geopolitical risks in Eastern Europe and the Middle East are likely to prove just as damaging in the medium term.”