CGMA Survey: U.S. Debt Debate Will Have Sweeping Effect on Global Business 

    Finance executives see lower U.S. credit rating, less relevance for dollar 
    Published January 23, 2013

    New York and London (Jan 23, 2013) — As the U.S. Congress prepares a temporary patch for the nation’s debt ceiling, the world’s CFOs, controllers and other management accountants are predicting at least some impact on their own operations and a weaker position for the U.S. in the long run. That’s according to a survey of 1,300 Chartered Global Management Accountant designation holders conducted last week by the American Institute of CPAs and Chartered Institute of Management Accountants.

    Almost two thirds, 62 percent, ultimately expect a lower credit rating in the wake of U.S. action on the debt ceiling and spending, signaling that they anticipate too much borrowing or too few cuts to satisfy ratings agencies.  More than half, 53 percent, expect higher U.S. interest rates and 70 percent anticipate a weaker dollar. Sixty-two percent are concerned market volatility and uncertainty could cause short-term focus or disrupt long-term planning in their organizations. And a third, 35 percent, worry business borrowing costs will rise or capital markets will tighten. Only 4 percent see no effect on their businesses.

    In the U.S., almost half of executives, 49 percent, said their organizations are maintaining status quo as they await action in Washington.  Four in 10, or 43 percent, said their businesses are delaying hiring and 39 percent said they are holding cash and postponing capital investment. Among the biggest long-term concerns is that the U.S. dollar will continue to weaken against other currencies. Indeed, less than half of U.S. CGMAs surveyed, 44 percent, expect the dollar to still be the world’s dominant reserve currency in a decade.

    “The repercussions of U.S. debt ceiling and spending decisions will reverberate across the global economy and may touch many of the world’s businesses,” said Barry Melancon, CPA, CGMA, and AICPA CEO. “Management accountants are bracing for short- and long-term implications, even as they look for ways to make their businesses less vulnerable to the pulses of geo-political forces.”

    CGMA business experts make up the world’s largest community of management accountants and guide business decisions across the globe, including at 95 of the world’s top 100 brands and 91 of the Fortune 100. They hold positions such as CEO, CFO, controller and finance director and have a broad perspective on the long-term prospects of their organizations, their markets and their regions.

    In the AICPA and CIMA survey, 60 percent global respondents with the CGMA designation said their businesses are too sensitive to economic crises, and 57 percent agreed their organizations must seek new ways to be resilient and less susceptible to macro-economic volatility.

    Charles Tilley FCMA, CGMA, Chief Executive, CIMA, said:

    “There will always be another U.S. debt crisis, Arab Spring or Eurozone disaster just around the corner.

    “This uncertainty simply cannot drive business strategy. These ‘grey swans’, as some business commentators have termed them, are prompting organizations to cut spending and investment at a time when innovation is absolutely vital to our economic health.

    “Indeed the seizing of opportunities is key to long-term survival and so we must all plot a suitable course between risk and innovation, managing the approach and mitigations put in place to address these uncertainties.”

    About the research: An email survey of CGMA designation holders was conducted January 14-17 and received 1,302 responses from 69 countries. For more information, contact Jonathan B. Cox at 919.402.4499 or jcox@aicpa.org or Mitchell Slepian at 212.596.6177 or mslepian@aicpa.org, both with AICPA Media Relations.




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