Recovery may be slow and jobless: KPMG exec

John Harrison. Photo / Brett Phibbs

The global economy will take at least another year to get back on its feet and there are no guarantees its recovery will generate more jobs, a director of one of the biggest global accountancy firms says.

KPMG deputy chairman John Harrison, who was in New Zealand yesterday, said while people believed the worst was over there remained a lot of concern about how fast the world would recover from the global financial crisis.

"There is a lot of talk about speed bumps along the way - and a jobless recovery," said Harrison who is from Britain but has been based in Hong Kong for more than 20 years.

Harrison said a lot of companies had tried to do the "right thing" by way of keeping hold of as many people as they could during the recession.

But that meant many could now cope with a pick-up in the economy without having to hire anyone new.

"It's a concern for governments and all new graduates coming into the workforce."

The global financial crisis had also prompted almost all companies to reassess their positions.

"There isn't a CEO I have talked to that hasn't reviewed their business model, looked at costs and processes to see what enhancements they can make."

Harrison said he believed the biggest thing the world had learned from the crisis was how interconnected the global economy was.

Six months before the recession global leaders were talking about the de-linking of China from the rest of the world in its emergence as a superpower.

"Clearly that is not the case. We have got a global delivery system and supply chain."

Harrison said the crisis had left a huge lack of trust that was now having to be rebuilt.

"The majority of companies, not just small to medium companies but also blue chips, are having issues with getting credit from banks."

He believed regulators had also learned they needed to work much more closely with each other.

Harrison said that meant tax, regulation and protectionism were going to be big issues in the new world.

But the huge global debt amassed to bring on the bail-outs would also have to be paid for.

Harrison said there were only two ways governments could do that - through cutting costs or raising taxes.

Harrison said it came as no surprise that Australia and the Asia Pacific region was one of the first to emerge from the financial crisis.

"The Australian banks were very solid through the crisis so it's not surprising that it has come out fastest. You also have strong regulations and banking systems. Australia also has a commodity base with China."

Harrison said from an outsider's point of view New Zealand appeared to be recovering.

"Your GDP is starting to pick up. Unemployment seems manageable at the moment. The issue for New Zealand is the strength of [your] dollar."

Harrison said it was difficult to get the right balance and at the moment it was hurting exporters including major industries like tourism.