Lahore
Outbreak of war in the Middle East overshadowed the results from the ACCA and IMA Q1 2026 Global Economic Conditions Survey (GECS). The survey fieldwork – conducted between 3rd and the 19th of March – coincided with the outbreak of the conflict in the region, which will have been a major factor weighing on respondents’ sentiment.
For Pakistan, the survey’s findings carry particular resonance. As a significant energy importer, Pakistan faces direct exposure to the surge in oil and gas prices and supply shocks triggered by the conflict – Brent crude prices rose by nearly 70% following the outbreak of hostilities. The cost impact on fertilisers, identified in the survey as a major consequence of the Middle East conflict, poses a significant risk to Pakistan’s agricultural sector and food security. Meanwhile, currency depreciation pressures – a hallmark of market uncertainty in emerging economies – add further strain to Pakistan’s financial outlook. The survey also highlights that emerging and developing economies typically have less fiscal space to absorb such shocks, underscoring the importance of sound financial management and strategic resilience.
Globally, 74% of surveyed finance professionals now expect inflation to rise over the next three months – up sharply from 50% in Q4 2025 – and 35% expect interest rates to increase. Geopolitical instability ranked as the top risk priority across Asia Pacific, with 33% of the region’s respondents placing it first, above the global average of 25%. Cybersecurity ranked second globally, a risk of growing relevance as Pakistan’s digital economy and fintech sector expand.
Assad Hameed Khan, Head of Pakistan, ACCA, said: ‘This survey holds up a mirror to the realities facing Pakistan’s finance professionals. Inflation, geopolitical uncertainty and constrained fiscal space are converging to create a uniquely challenging environment for businesses and for those who serve them. Forward-thinking policy framework, sound financial judgement, ethical leadership and rigorous risk management have never been more important. ACCA remains committed to equipping our members and future members with the tools to navigate this environment – and to serve as trusted advisors to businesses and communities across Pakistan.’
The survey showed a sharp decline in confidence among accountants and finance professionals in the early months of 2026. Sentiment is close to the series lows recorded at the beginning of the pandemic in 2020, as firms grapple with the fourth major shock to hit the global economy already this decade. Confidence also fell very sharply among chief financial officers taking part in the survey.
While the April two-week ceasefire brought hope to markets of some recovery from the biggest global oil shock since at least the 1970s, the enormous uncertainty clouding the global economy remains. Even if a more durable resolution is found energy and other commodity prices look set to remain elevated.
While geopolitical instability unsurprisingly ranked as the top risk priority for accountants in Q1, it is only the second time since the global risks survey was added to the GECS in Q2 2023 that economic risks have not been the top concern.
They were in third place after cyber risks which were second.
Rachael Johnson, Head of Risk Management and Corporate Governance, ACCA, said: ‘This shift does not suggest a reduction in economic worries, but a growing recognition of how converging forces shape the macro landscape. Respondents point to AI and cyber threats amplifying other risks, and emphasise how eroding trust – in institutions, information and leadership – is becoming a defining feature of operating in today’s world.’
Rising cost pressures were evident at businesses in Q1, with the percentage of respondents reporting increased operating costs at its highest rate since Q3 2022 in the aftermath of Russia- Ukraine conflict. Given the recent spike in the price of energy and other important commodities and increasing stresses in supply chains, the risk is that cost pressures facing firms will mount over coming months.
Some of the survey results were a bit more encouraging though, likely owing to the resilience of the global economy ahead of the onset of the conflict in the Middle East. The Global New Orders Index registered a solid increase and is now at its historical average level. The Global Employment Index, which captures the hiring and firing decisions of firms, also improved somewhat, while remaining below its historical average.
Alain Mulder, Senior Director, Europe Operations & Global Special Projects at IMA said: ‘The global economy entered 2026 in decent shape, but enormous uncertainty currently clouds the outlook. Inflation is already beginning to rise sharply, and downside risks to growth will mount the longer energy and other commodity prices remain elevated.’
Jonathan Ashworth, Chief Economist, ACCA, said: ‘Major supply shocks create very tricky situations for policymakers. After years of above target inflation, central bankers need to tread very carefully so as to not let the inflation genie out of the bottle. Very high government debt levels also constrain the room for major fiscal support in many countries, even in advanced economies.’
Ashworth concluded: ‘Developments in the Middle East over coming weeks and months will be absolutely key for global economic prospects over the remainder of 2026’.
