Muscat: Threats to long-term economic stability remain as countries recover from the global economic crisis, according to a five year review of finance professionals' economic insights.
Any recovery may also be limited to just a few 'islands of financial stability', report author Manos Schizas, senior economic analyst at ACCA (the Association of Chartered Certified Accountants), has warned.
This is one of a number of worrying conclusions, based on a five-year review of the ACCA/IMA Global Economic Conditions Survey, the largest economic survey of professional accountants in the world.
The two associations 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 small and medium enterprises (SMEs) and large corporate. While conceding the benefits of stronger banks on business investment, it warns of a growing imbalance fuelled primarily by central banks.
"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," said Manos Schizas.
The two associations have also called on policymakers to take stock of the impact of unconventional monetary policy by Organisation for Economic Co-operation and Development (OECD) countries — particularly the unintended spill-overs into emerging markets.
The report, compiled from data created by 40,000 responses over five years, also raises questions about whether inflation really is dead at the global level, noting that it never really fell in Africa and the Middle East, while in Asia-Pacific input prices have rebounded since late 2012.
Even the Chinese mainland, which has driven much of the global fall in inflation, saw a rebound from mid-2013 onwards.