After briefly going into reverse at the end of 2010, the global economic recovery picked up speed again in early 2011, but conditions remain fragile.

This is the outlook from the latest version of the Global Economic Conditions Survey by the Association of Chartered Certified Accountants (ACCA), drawing on the views of 2,367 professional accountants around the world.

ACCA's Confidence Index reached relatively safe levels (-3) this quarter, up from a dangerous reading of -13 in the previous one, as both demand and cash flow conditions have continued to improve around the world for the time being.

While this has generally led to a stabilization of the outlook for employment and investment in developed countries, accountants in the developing world report slightly less investment in staff and more layoffs as businesses continue to come to terms with the weaker-than-expected recovery.

Possibly the most worrying development during the last quarter was the explosive rise of operating costs, following a steady build-up over the last year.

More than half of the professionals responding to the survey reported problems with input inflation, making this the most commonly cited business challenge.

Although the worst problems were reported in Malaysia and Singapore, this trend was not confined to the faster-growing markets in the East but was reported with only marginally lesser intensity even in the most sluggish of the developed economies.

Asia Pacific

Although about 42 percent of respondents in the region believe things are getting better, this is the lowest percentage in a year, and down sharply from three months ago.

Confidence rose faster on the Chinese mainland and fell the fastest in Malaysia, while remaining constant in Singapore.

Small financials and small practices appear to have been particularly hard hit, while large financials and corporates are only barely in positive territory. While business incomes continued to rise in the last quarter, new orders did not - suggesting the region's economic recovery is facing headwinds.

These, combined with soaring inflation and a mild rise in the incidence of cash flow problems (represented by late payment and customer failures), has set back job creation and the employment outlook in general.

Africa

Respondents in Africa have consistently been the most optimistic about the state of the global economy and for the past year they have been the most confident among ACCA's global sample.

With 47 percent of respondents reporting gains in confidence and 48 percent believing the global economy is improving, these trends have persisted into early 2011, but confidence is clearly weakening.

Operating costs are on the rise, throughout Africa, which has faced worse inflation than any other region over the past two years.

While demand continued to stabilize, the combination of inflation and tightening access to finance has given accountants reason to expect a rise in business failures and caused more business to lay off staff.

Western Europe

Late 2010 was a difficult time for respondents in Western Europe as the sovereign debt crisis claimed another victim.

Since then, both respondents' confidence and their overall assessment of global economic conditions have improved without making up for much lost ground.

With only 21 percent reporting confidence gains and 29 percent believing economic conditions are improving or about to improve, Western Europe hasn't been this gloomy in at least 18 months.

For the time being cash flow conditions are stable and business insolvencies are down, but with demand and access to finance tightening, this may not last.

(The article is adapted from the ACCA's latest Global Economic Conditions Survey.)