Thanks to the noticeable gains realized in the first quarter, business confidence as well as optimism about the global economy has witnessed a sharp rise in the second quarter of 2013. Compared to 43 percent in Q1, a healthier 47 percent of the total respondents to a Q2 Survey have aired their feeling that the economy was showing greater signs of improvement or gearing up to move in that direction. Importantly, optimism has reached such dizzy heights for the first time in the last couple of years, mainly on account of the encouraging news about both the global and national economies, and the support offered by promising economic data. According to the Survey Editor, Emmanouil Schizas, who is also a senior economic analyst, although it appears to be real for significant parts of the world, it must not be misconstrued as a recovery for all. However he advised “if this new found dynamism persists beyond a couple of quarters it could build its own momentum independent of monetary policy”.

Gecs Business Confidence Index Up

In the wake of 26 percent of respondents expressing a better level of confidence in the well-being of their organizations, the GECS business confidence index moved up in the second quarter. ACCA and IMA, who did not favor unwarranted optimism in Q1, opined that business confidence retracted with enhanced fundamentals in Q2 of 2013. Business confidence is also experiencing changes on account of the fiscal policy. Respondents anticipated that several “big spenders”, including China, Russia, and the US, are likely to amend their fiscal policies in the next five-year period.

Despite business confidence remaining firm at the global level, optimism is not shared evenly across the regions, Emmanouil Schizas said, adding only North America and Africa looked like witnessing real economic recovery. While respondents remained more optimistic about the recovery in the second quarter in the Middle East, Western Europe, and the Caribbean, the signs were not quite encouraging when it came to South Asia and Central and Eastern Europe.

Strong Rebound in Manufacturing

Riding on a strong rebound in the manufacturing and engineering sectors, US business confidence shot up in the second quarter of 2013, reflection of which could be seen in the enhanced perceptions of the economy. Raef Lawson, Ph.D., CMA, CPA, IMA vice president of research, expressed the view that the US economy was preparing itself to overcome the shocking political impasses of 2012. With 43 percent of respondents – against the 24 percent in Q1 – asserting to be optimistic about the future, confidence in the economic recovery in the UK appeared to have witnessed a remarkable increase.

UK Sees Growth in Business Confidence

Noting that such a view has received support from the IMF that upgraded UK growth forecasts recently, Emmanuoil Schizas issued a word of caution saying “it also builds on many consecutive quarters of steady improvement that haven’t yet been reflected in GDP figures”. Along with UK business confidence, access to growth capital by UK businesses has also been showing good signs of improvement, prompting businesses to build more human and physical capital.

Although there are several positive developments, tightening quarter-on-quarter and year-on-year demand and cash flow conditions in the second quarter of 2013 has only resulted in marginal increase of business opportunities. Emmanuoil Schizas sounded quite optimistic when he said that the second quarter of 2013 appeared all set to prove a point for the global economy.