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Rise in global business confidence
Global business confidence rebounded in the first quarter of 2017 and is now at its highest level since the second quarter of 2015, according to the latest edition of the Global Economic Conditions Survey.
The quarterly survey of global CFOs and finance professionals, conducted by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA), has found that economic sentiment 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.
Orin Gordon, head of ACCA Caribbean said: “The survey has found that inflationary fears are putting pressure on global economies, with nearly half (46 per cent) of firms reporting increasing costs as a cause for concern. Despite this there are significant improvements for employment and investment, with 22 per cent of firms planning to create more jobs and raise capital expenditure (up from 16 per cent and 14 per cent respectively in Q4 2016).
“The rise in confidence, combined with strong economic hard data, offers genuinely encouraging signs for the global economy. In particular, the US economy has maintained an elevated level of confidence from Q4 in 2016, with 37 per cent of firms feeling more confident. An expectation of increased infrastructural spending and tax cuts has contributed to a buoyant business mood even though they are yet to materialise into policy. This is good news for the Caribbean which is highly dependent on US economic growth.”
In response to the report Faye Chua, head of business insights at ACCA, said: “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”.
Gordon added 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 per cent this year, the fastest rate of growth since 2012,” he said.
“Yet in this period of fragile recovery, a number of policy interventions could have a significant impact. The new US administration has yet followed through on its tough campaign rhetoric on trade. If and when it does, the picture, and the mood, will change significantly. The effect of Brexit on the UK and the Eurozone has mainly been around a slide in the value of the Pound (to a level that’s held steady), but that could change as Article 50 negotiations begin and the French and German elections take place.
“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 and IMA, 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 February 24 and March 13 and attracted 1,334 responses from ACCA and IMA members around the world, including more than 150 CFOs.