Dark days ahead: Local business confidence slides in Q2 over bleak economic outlook

It ended a two-year streak of confidence gains.

Is Singapore headed towards economic stagnation? Finance professionals polled recently by the Association of Chartered Certified Accountants and the Institute of Management Accountants definitely seem to think so.

The Global Economic Conditions Survey revealed that 54% of finance professionals around the world believe that economic conditions are deteriorating or stagnating, up from 40% in early 2014.

As a result, business confidence in Singapore fell in Q2 2014, ending a two-year trend of confidence gains. Only 15% of respondents reported confidence gains in Q2, down from 29% in early 2014.
The report noted that business opportunities in the country remained flat in spite of favorable access to growth capital and marginal improvements in cashflow and demand conditions.
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This combination meant that a surge of funding was directed into asset purchases and inorganic growth while net capacity building by Singaporean businesses fell.

“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. 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,” noted Manos Schizas, senior economic analyst at ACCA.

Here’s more from the report:

Although these fundamentals might not appear terribly discouraging on their own, they must be seen in the context of a darkening macro-economic outlook for Singapore.

Although 42% of respondents (up from 40%) were optimistic, 54% of respondents (up from 40%) believed that conditions were deteriorating or stagnating.

Only 15% of respondents reported confidence gains in Q2, down from 29% in early 2014. Singapore’s traditionally robust fiscal policies do, however, provide finance professionals with some reassurance. After a whole year of adjusting expectations, respondents in Singapore now appear to believe that government spending levels are just right.