Pakistan (Muhammad Yasir)

The latest economic conditions survey from ACCA and IMA of accountants and CFOs across the globe suggests that the sharp rebound in global confidence in the aftermath of Russia’s invasion of Ukraine has ended

Ongoing aggressive interest rate hikes by central banks, and China’s weaker than expected economic recovery, have likely weighed on confidence, offsetting any benefit from receding fears of a global banking crisis and falling inflation.

There is no evidence that a global recession is on the cards though. Sentiment at the global level remains around its long-term average, as do the key New orders, Capital expenditure, and Employment indices.

There were some notable regional trends. Confidence fell sharply in Asia-Pacific and the export-sensitive Western Europe. But confidence in North America actually rose for the fourth consecutive quarter, with gains in the New orders, Capital expenditure, and Employment indices. This would suggest that the U.S. economy may continue to defy predictions of a recession.

It is somewhat surprising that the aggressive monetary tightening has not had a material impact on the GECS “Fear’’ indices which reflect respondents’ concerns that customers and/or suppliers may go out of business. Both these indices continue to improve (see chart below), which suggests little concern about the impact of higher interest rates, recession risks, or the growing number of bankruptcies.

Of course, it may just be a case of calm before the storm, as the lagged effect of tighter monetary policy works its way through the global economy and financial system. Indeed, our indices measuring global problems accessing finance and securing prompt payment both deteriorated in 2Q, although neither looks particularly worrying yet by historical standards. Meanwhile, the percentage of global respondents concerned about increased costs declined slightly again, although it remains very elevated by historical standards, suggesting that central banks may have more work to do.

Rashid Khan, ACCA’s campaign manager in Pakistan, said: ‘The second quarter economic conditions survey from ACCA and IMA of accountants and CFOs across the globe suggests that the sharp rebound in global confidence in the aftermath of Russia’s invasion of Ukraine has ended. There is little evidence that a global recession is on the cards though. From Pakistan’s perspective, the sharp decline in confidence in the important Western European and Asia-Pacific markets is of some concern. However, the resilience of the US economy, its largest single export market, is a key positive. Going forward, external developments will remain very important for the Pakistani economy, both through the trade and financial channels.

Jonathan Ashworth, Chief Economist at ACCA, said: “The survey aligned with my sense of how things are developing in the global economy, with some loss in momentum through 2Q. Things don’t look particularly alarming though, and a global recession does not look imminent. By region, things aren’t looking that great in Asia-Pacific and Western Europe. Chinese policymakers may need to increase policy stimulus, while the ECB and BoE might want to tread carefully with monetary tightening. In contrast, the U.S. economy is looking pretty resilient, suggesting the Fed may be able to carry off the much talked about soft landing”.

Dr. Susie Duong, Director of Research at IMA, said: “Looking at the change in the GECS Confidence Indices over the year, one notable factor is the resilience of North America. With a stronger than expected growth of the U.S. economy in 2023 Q2, it suggests that an imminent recession for the U.S. does not seem likely this year, although Asia and Europe could increasingly become a drag if growth decelerates significantly there. The robustness of the global ‘fear’ indices is also unexpected. However, it’s less clear that will still be the case at the turn of the year.”

Pakistan (Muhammad Yasir)

Chief financial officers (CFOs) have an immense responsibility and career-defining challenge in helping their organizations navigate complex multi-dimensional problems.

Businesses and other organizations face significant challenges in introducing sustainability into their business models and strategies. They also face increased sustainability reporting and assurance requirements. Their processes and systems will need to be updated and transformed to manage these.

These challenges arise against a backdrop of limited financial resources as well as human and natural resources. The long-term survival and success of business can no longer be assured with a narrow focus on financial return alone.

Today’s CFOs and senior business professionals require a combination of skills, behaviours and mindset, described as ‘integrative-thinking capabilities’, according to ACCA’s latest research ‘Integrative thinking: the guide to becoming a value-adding CFO’.

Report author Sharon Machado, head of sustainable business at ACCA said ‘CFOs and professionals who are ultimately accountable for well-informed decision making must be integrative in their own thinking. They need to consider the balance across the resources and meeting of differing stakeholder needs. Often, this will be in the face of incomplete, complex, uncertain or ambiguous information. CFOs need to act without being able to reliably predict the outcomes. In a fast-changing world, the organisation’s purpose and strategy may need to change, either incrementally, or sometimes, fundamentally.’

What are the integrative-thinking capabilities required by CFOs?

This guide explains the CFO’s five must-have integrative-thinking capabilities, and details how they are required for impact in navigating complex multi-dimensional problems, which are also explained.

• Continually becoming – constantly evolving through nurturing personal capabilities.
• Empathising – understanding other viewpoints and perspectives.
• Exploring – searching out unfamiliar territory.
• Co-creating – seizing the opportunities that arise from collaborating with others.
• Empowering – enabling colleagues and stakeholders to take actions.

The guide also outlines development needed for integrative thinking by providing insight on six approaches professionals should take to develop their integrative-thinking capabilities.

Raymond Jack, CFO of ACCA, commented: ‘This guide is both a call to action and a support to all finance professionals as they embrace complicated problems, and add broader than financial value to their organisations, society and the planet. It will help CFOs of today and of the future serve their purpose better.’

Being a successful CFO is not a static end-state. Continual learning, reflection and engagement with other people, are key to being the CFO that the organisation and the world needs.