Global business confidence rebounds in Asia

As the world watched Washington rattle global markets with a sweeping tariff announcement last week, the mood among accountants had already taken a turn for the worse.

By the time the news broke, finance professionals from North America to Europe had begun tightening their forecasts – and their belts.

A sense of déjà vu hung in the air, echoing the uncertainty of early pandemic days, with survey responses hinting at a deeper malaise within the business community.

According to the Q1 2025 Global Economic Conditions Survey (GECS) by ACCA and IMA, global confidence among accountants continued its downward slide. Although this quarter’s decline wasn’t as steep as the dramatic drop in late 2024, the mood remained subdued – marking the lowest point since Q2 2020.

The survey, conducted between late February and mid-March, captured sentiment just before the U.S. ramped up trade tensions with a major tariff policy shift – now seen as a significant new headwind for the global economy.

US outlook sours

Nowhere was the drop in confidence more pronounced than in North America, particularly in the United States. Accountants based there reported the second-lowest confidence levels on record. The main culprits: uncertainty around new trade policies and slashed expectations for federal spending.

Both capital expenditure and employment indicators in the U.S. tumbled to historically low levels, reinforcing the perception that firms are growing cautious. One small silver lining was the New Orders Index, which nudged upward and sat just shy of its long-run average – a signal that demand, for now, hasn’t completely dried up.

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Asia Pacific regains some ground

In a tale of two regions, Asia Pacific showed signs of renewed optimism. After steep declines in recent quarters, confidence rebounded strongly in Q1 2025. While still slightly below average, the turnaround was notable. Mainland China emerged as a key driver of this recovery, with a marked improvement in the New Orders Index since Q3 2024.

That said, the recovery wasn’t uniform across metrics. Capital expenditure in the region dipped significantly, even as employment indicators rose above their historical average – suggesting firms are investing in people but holding off on major projects.

Observers note that export front-loading ahead of the U.S. tariff hikes may have temporarily boosted regional demand, raising questions about the durability of the recovery. As trade tensions escalate, Asia Pacific could be sailing into choppier waters.

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Western Europe steadies itself

Western Europe, too, showed faint signs of recovery after a string of confidence drops in previous quarters.

But cost pressures remain a pressing concern, especially with inflation still elevated in the region. North America also saw input costs rise, adding to the pressure on margins and sentiment.

Warning signs from top economists

Jonathan Ashworth, Chief Economist at ACCA, cautioned that while global growth has stayed resilient in recent quarters, the prolonged slump in confidence could create a vicious cycle.

“The longer that confidence remains depressed, the greater the risk that a self-reinforcing negative cycle could potentially develop, with firms pulling back on orders, capital expenditure and hiring,” he said.

Alain Mulder, Senior Director at IMA, added that the U.S.’s evolving stance on trade and fiscal policy has cast a long shadow.

“New U.S. policies on trade and government spending, and the uncertainty surrounding them, appear to have had a large negative impact on confidence,” he noted, pointing also to broader signs of slowdown in U.S. markets.

Economy still top concern, but geopolitics rising

When asked about the greatest risks facing business in Q1 2025, accountants pointed first and foremost to the economy. But the devil was in the sectoral detail: cybersecurity was the number one concern for financial services, while the public and non-profit sectors placed it neck and neck with talent scarcity.

Corporate respondents flagged economic volatility as their top worry, with geopolitical instability a close second. Notably, geopolitical risk climbed to second overall in the global rankings for the first time, with U.S. participants particularly vocal about policy unpredictability and international tensions.

For HR and business leaders, these shifting winds underline the importance of agility and resilience. While some regions are seeing green shoots, the global economy is still walking a tightrope – caught between cautious optimism and looming uncertainty.