Global economic outlook remains positive

The quarterly survey of finance professionals including CFOs, conducted by ACCA (the Association of Chartered Certified Accountants) and IMA (the Institute of Management Accountants), found that despite uncovering a slight drop in confidence, the future is still bright especially when compared to the global outlook of the last couple of years. The number of respondents expecting conditions to worsen exceeds those expecting conditions to improve by 10 percentage points – yielding the second-highest confidence index in two years and better than the average since the survey began.

So the outlook for the global economy is promising, with all of the main economies set for decent growth over the next few years. Although a large-scale fiscal stimulus (in the form of tax cuts and increased spending on infrastructure) in the US is looking less likely, the US economy should continue to perform well, helped in large part by a strong employment market.

Consumption growth is the most important component of demand, and that should continue to drive the recovery in the US and elsewhere. Another reason for optimism is the overall health of the banking sector. Credit growth from banks has picked up which is a sign that investment is going to pick up too.

Meanwhile, over the coming year growth in the Caribbean region may benefit from strong tourism revenues, supported by the recovery in the global economy, most notably in the US and Latin America. Many parts of the Caribbean, most notably Trinidad and Tobago, suffered when commodity prices fell. For our commodity producing nation, rich in petroleum, cocoa and citrus fruits to name a few, falling prices meant a loss of export earnings, jobs under threat and a currency crisis because it led to depreciation of the currency value, which is inherently underpinned by the worth of our commodity exports.

Caribbean economies - such as Barbados, Jamaica and the Cayman Islands can be helped with the pick-up in tourism numbers and demand for financial services from the US. Tourism is a major contributor to the region’s economic growth. The Caribbean Tourism Organization (CTO) reported that Caribbean islands welcomed an estimated 28.7 million people in 2015, an increase of 7% on visitors in the year before. North America was the most confident region followed closely by South Asia.

Elsewhere, emerging economies have reported greater improvements to economic confidence. The economies of Brazil, Russia, India and China are all now growing simultaneously for the first time in over two years.

Meanwhile, the Eurozone may benefit from easing austerity, and investor confidence after parties opposing the European Union failed to deliver in recent elections. Through a combination of a gentler than expected slowdown in China and consumption growth driving recovery in the US and elsewhere, this has led to a fairly positive global outlook for this quarter.

The IMF recently upgraded its forecasts for global growth to 3.5% in 2017 and 3.6% in 2018, up from just 3.1% last year. Given the improving outlook, this is looking more than achievable.

Getting the economic confidence back up in any country can be very difficult. But it is vital for an economy and it is up to policymakers to demonstrate clear ideas to boost business confidence and avoid further downward drift. Accountants are crucial to steering businesses through these difficulties; after all accounting is the backbone of the business financial world. Through contributing to discussions about economic growth, managing finances and promoting good financial management, they enable CFOs to successfully navigate businesses as they face tough times ahead and take advantage of challenging circumstances.