The rise has been spearheaded by an increasingly confident outlook in North America and is reflected across leading developed and emerging markets. In particular, there has been the fastest rate of growth in global trade since 2015. Commenting on the findings Mr. Sajjeed Khan, head of ACCA Pakistan, said, "Confidence is higher in Pakistan than it has been for some time, which is a reflection of how the fundamental health of the economy is improving. The prospect of construction work continuing on the Pakistan-China Economic Corridor this year, and substantial investment ahead, is driving an optimistic outlook in the economy."
At the same time, inflationary pressures are a concern with 48 percent of firms worried about rising costs. It will be a challenge for the government to keep interest rates low if inflation starts to rise. Faye Chua, head of business insights at ACCA, says that the global economy has so far proven resilient in the face of multiple policy challenges,
The rise in confidence, combined with strong economic hard data, offers genuinely encouraging signs for the global economy: with an increasingly optimistic mood in the US and a stimulus-led recovery in China driving prospects for world trade. This strong start to the year has taken place against a backdrop of potential threats facing the world economy at the start of 2017. There have been uncertainties over the future of US trade policy under the new administration, the potential of a Eurozone banking crisis during a key election year across Europe and the UK's triggering of Article 50 to begin the process of leaving the EU.
Yet many of these fears have yet to be realised, and the prospect of increased government spending as austerity measures come to an end in many developed economies means that short term prospects look bright. These are the clearest signs of a synchronised and sustained recovery since 2011, and we can reasonably expect that to continue over the next two quarters.
Yet the survey has found that inflationary fears are putting pressure on global economies, with nearly half (46 percent) of firms reporting increasing costs as a cause for concern. Despite this there are significant improvements for employment and investment, with 22 percent of firms planning to create more jobs and raise capital expenditure (up from 16 percent and 14 percent respectively in Q4 2016).
Faye Chua adds that policy-makers will have an important role in the coming months, This quarter demonstrates there are signs that the global economy is returning to a degree of health after some very tough years: the IMF is expecting global growth of 3.4 percent this year, the fastest rate since 2012.
Yet in this period of fragile recovery, a number of policy interventions could have a significant impact. The new US administration has proven moderate in trade policy so far but the potential remains that a more restrictive direction could be implemented. Similarly, whilst the UK and Eurozone have so far remained unaffected by the prospect of Brexit, that could change as Article 50 negotiations begin and the French and German elections draw closer.
How policy-makers respond to this uncertainty, and growing inflationary pressures, will be crucial over the coming months. The Global Economic Conditions Survey (GECS), carried out jointly by ACCA (the Association of Chartered Certified Accountants) and IMA (the Institute of Management Accountants), is the largest regular economic survey of accountants around the world, in terms of both the number of respondents and the range of economic variables it monitors. Fieldwork for the Q1 2017 GECS took place between 24 February and 13 March 2017 and attracted 1,334 responses from ACCA and IMA members around the world, including more than 150 CFOs.-PR
Copyright Business Recorder, 2017