Economic uncertainties, talent shortages among challenges impacting APAC's growth in 2025: Report

The Asia Pacific economy faces a tough year ahead, according to the latest ACCA-IMA survey. Businesses are grappling with economic pressures and a shrinking skilled talent pool.

Confidence levels in the Asia Pacific region have taken a significant hit, reaching their lowest point since Q1 2020. Businesses are feeling the strain of the weak recovery in China’s economy and the higher risk of higher US import tariffs.

Key indicators in the latest ACCA-IMA survey, published in the Global Economic Conditions Survey Report: Q4 2024, reflect this growing unease. Both the Capital Expenditure Index, and the Employment Index have fallen sharply. They are now at their lowest since Q4 2022 and Q4 2020, respectively.

However, there is a small glimmer of hope, as the New Orders Index saw only a slight dip and remains above its historical average. This suggests that while confidence has taken a knock, business activity might not slow down very quickly.

CFO confidence takes a hit, but new orders improve

The report also highlightED a sharp drop in confidence among Chief Financial Officers (CFOs), now significantly below its historical average. This points to growing caution and nervousness about what lies ahead. Despite this, there is moderate improvement in the New Orders Index for CFOs but remains below average.

While the Capital Expenditure Index for CFOs rose slightly, it remains below its historical average. In contrast, the Employment Index saw a steep fall, reflecting hesitancy around hiring decisions. Cost concerns, though still present, have eased compared to previous quarters. The mixed signals highlight that CFOs are moderately pessimistic.

Talent scarcity ranks as top risk IN THE REGION

Beyond economic worries, many finance professionals in Asia Pacific see talent shortages as their biggest challenge. The report shows that talent scarcity is the top risk in both Asia Pacific and Western Europe. Businesses are struggling not only to fill roles but also to find people with the right skills to drive growth and innovation.

To this effect, a financial director from Singapore, cited in the report, commented: "Many companies overlook the impact of having under-skilled individuals in decision making positions. Therefore, in the long run, the company has to deal with many risks that could have been avoided, and it has to deal with the backlash because the persons selected to hold skilled positions throughout the organisation are persons without the [necessary] skill set, experience or foresight."

For HR leaders and business decision-makers, this serves as a timely call to action, urging leaders to tackle economic risks and bridge talent gaps which are both crucial for achieving sustainable success in 2025 and beyond.

Lead image: Global Economic Conditions Survey Report: Q4, 2024