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CGMA Global Economic Forecast shows cautious optimism for year ahead

Global index of management accountants reveals anxiety about domestic economies

The CGMA Global Economic Forecast, a quarterly survey of more than 600 senior management accountants from around the world, has found a cautious level of optimism for the global economy over the coming 12 months. The overall index score is up seven points to 65, from 58 in the last quarter, according to research from the Chartered Institute of Management Accountants (CIMA) and the American Institute of Certified Public Accountants (AICPA).

The Index is compiled as an aggregate of ten economic dimensions on a scale from 0 to 100, with 50 considered neutral and numbers above that indicating positive sentiment. The ten factors include: global economic optimism, domestic economic optimism, organisational optimism, plans for expansion, revenue, profits, headcount, spending on IT, other capital and training and development.

However, while the overall economic index - with expansion, revenue, headcount and spending taken into account - is at 65 points out of 100, confidence levels were lower when respondents were asked to consider the plight of the global economy alone. In the 'Rest of the World Emerging' only 18% said they felt optimistic about the global economy but this increased significantly to 41% when asked how they felt about their own country's economy;

Global economy: a score of 37, with only 18% of respondents expressing optimism (ranging from a high of 22% of US respondents to a low of 10% respondents from 'Rest of the World Developed'; UK respondents 20% and Europe 21%)

Domestic economy: UK respondents 17% optimistic and Europe 23%, compared with their US counterparts at 44% and 46% in Asia

However, when it came to optimism about their own organisation, the CGMA Index showed that management accountants' confidence rose significantly:

Organisational optimism: 56% of respondents are now optimistic about prospects for their organisation, up from 46% last quarter; of the respondents based in the 'Rest of the World Emerging' economies 66% were optimistic, the highest of all the global regions surveyed

Expansion: 66% expect their business to expand at least somewhat over the next year; the 'Rest of the World Emerging' regions led the way with 78% thinking their business will expand

Hiring: Globally, 42% said their organisation plans to increase their number of employees in the coming year, compared to 38% previous quarter

Geetu Ahuja, Regional Manager, CIMA Middle East, said: "Management accountants work where finance and business strategy meet and so are perfectly placed to assess the future from both a micro and macro level. Whilst it's great to see that overall, confidence is up on the last quarter, when you look at the underlying factors there is a marked difference between how they feel about their own organisation's ability to succeed in continuing challenging times and their confidence in the domestic and global economy to emerge from the gloom. However, many are predicting some growth in revenue, profits and spending which is encouraging."

In the area of revenue the 'Rest of the World Emerging' economies led the way and are expecting to see a 6.0% increase. The top challenges for the region are the availability of skilled personnel, domestic economic conditions and the global economy.

Other key global findings included:

Revenue - this was up six points from 70 in the last quarter, to 76

Profits - index score rose from 65 to 69

Spending - plans from spending also improved across the board in the first quarter of 2012. The current expected average increase in IT spending is now 2.5%. Other capital spending is expected to increase 2.4%, and training and development budgets are up 2.1%

From an industry sector perspective, 63% of manufacturing respondents are now optimistic about their own company, followed closely by those in finance and insurance (62%). In the retail and wholesale trade 59% are feeling optimistic as are technology sectors at 55%. In banking 50% are expressing optimism and in the construction industry 37%.

Arleen Thomas, Senior Vice President for Management Accounting, AICPA, commented:

"Management accountants are in a unique position to assess the future of the global economy as they drive the strategic and financial decisions of their companies. In aggregate, the CGMA Global Economic Index rose seven points from last quarter, indicating an important and positive economic trend. In the US the story is even stronger, with organisations feeling increasingly confident about the overall domestic economy, as well as prospects for their own businesses."

The CGMA Global Economic Forecast: Insights from management accountants captures the views of a select panel of AICPA and CIMA executives from around the world on global economic conditions and current topical issues. The Forecast is intended to highlight the broad business perspective of management accounting executives and the value that they bring to their organisations. For a copy of the report go to www.cgma.org/resources.

The 10 measures are:

1. Global Economy Optimism - Respondents' optimism about the global economy

2. Domestic Economy Optimism - Respondents' optimism about their own national economy

3. Organisation Optimism - Respondents' optimism about prospects for their own organisation

4. Expansion Plans - Respondents' expectations of whether their business will expand over the next 12 months

5. Revenue - Expectations for increases or decreases in revenue over the next 12 months

6. Profits - Expectations for increases or decreases in profits over the next 12 months

7. Employment - Expectations for increases or decreases in headcount over the next 12 months

8. IT Spending - Plans for IT spending over the next 12 months

9. Other Capital Spending - Plans for capital spending over the next 12 months

10. Training & Development - Plans for spending on employee training and development over the next 12 months

Chartered Global Management Accountant (CGMA)
Two of the world's most prestigious accounting bodies, AICPA and CIMA, have formed a joint-venture to establish the Chartered Global Management Accountant (CGMA) designation to elevate the profession of management accounting. The designation recognises the most talented and committed management accountants with the discipline and skill to drive strong business performance.

Chartered Institute of Management Accountants (CIMA)
The Chartered Institute of Management Accountants, founded in 1919, is the world's leading and largest professional body of Management Accountants, with more than 195,000 members and students operating in 176 countries, working at the heart of business. CIMA members and students work in industry, commerce, the public sector and not-for-profit organisations.

American Institute of CPAs (AICPA)
The American Institute of Certified Public Accountants (AICPA) is the world's largest association representing the accounting profession, with nearly 377,000 members in 128 countries and a 125 year heritage. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting.

Index Methodology
The CGMA Global Economic Forecast: Insights from management accountants quarterly survey was completed by CGMA panelists between 22 February and 13 March 2012. Panelists comprise CGMA Management Accounting Professional Decision makers (primarily CFOs, CEOs and Controllers) who work in Business & Industry.

In total, the opinions of 618 CGMA Management Accounting Professional Decision makers from around the world were captured in 1Q 2012.

The regional breakdown of panelists who participated in the 1Q 2012 survey is available. Panelists were identified and baseline data were collected during a pilot survey conducted in November 2011.

The 'Rest of the World Emerging' regions include Angola, Bahamas, Barbados, Bermuda, Botswana, Brazil, Cayman Islands, Gambia, Ghana, Guam, Kenya, Kuwait, Liberia, Malawi, Mauritius, Nigeria, Paraguay, Peru, Puerto Rico, Qatar, Saudi Arabia, Senegal, Sierra Leone, South Africa, St Helena, Taiwan, Tanzia, Trinidad and Tobago, UAE, Zambia and Zimbabwe.

For press enquiries please contact:
Priscilla Stanley
Ketchum Raad Middle East
+971 4 425 8978
priscilla.stanley@ketchum-raad.com

© Press Release 2012

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