Despite the destabilizing impact of hostilities in the Middle East, global economic confidence among accountants and financial executives improved in the second quarterrebounded. This conclusion comes from a quarterly survey jointly released by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA).

However, this quarterly economic confidence index, which has a 15-year history, remains at low levels after a sluggish performance in the first quarter.

Index Reading: Improved but Still Below Historical Median

The economic confidence index reading for the second quarter was-26.5, a significant improvement from the first quarter's-39.5. The latter was the third lowest reading in the index's history. However, since early 2022, the index has consistently failed to return above its historical median.

The index is calculated as the percentage of respondents who feel more confident about their organization's economic prospects over the next three months, minus the percentage who feel less confident.

Survey Timing and Background

The most recent economic confidence survey by ACCA and IMA was conducted fromJune 3 to 17, receiving a total of647 valid responses. Most responses were submitted before Iran announced a ceasefire and the reopening of the Strait of Hormuz. Since then, both the ceasefire agreement and the strait's navigability have seen setbacks.

Report Perspective: AI Boom Supports Growth

ACCA and IMA wrote in the report: "Despite the drag from developments in the Middle East, the relative resilience of the global economy may have contributed to the improvement in confidence. The AI boom has become a key support for global growth, with AI-related investment and international trade surging."

The report also noted that significant gains in technology stocks have driven stock markets to repeated record highs.

However, the report also cautioned that, given overall confidence levels remain relatively low, the negative impact of the Middle East conflict may continue to manifest in the coming months.

Cost Pressures: CFOs Feel It More Strongly

The survey showed that83%of CFO respondents reported rising costs in the second quarter, mainly due to significant increases in commodity prices and supply chain disruptions caused by the conflict. The report speculated that this crisis may prompt major central banks to further tighten economic policy.

Among all respondents, the proportion reporting rising costs was slightly lower than among the CFO group, at76%。

Risk Priorities: Economic Pressures Top the List

Notably, financial professionals' concern about overall economic risk is actually higher than their focus on the conflict itself. When asked to identify the top risk in the second quarter,22%of respondents chose "economic pressures," a proportion higher than geopolitical instability and cybersecurity.

ACCA and IMA wrote in the report: "Respondents described that understanding today's risk landscape goes beyond traditional economic cycle management, requiring attention to the compounding effects of prolonged war, rising cybercrime, and policy uncertainty."