Here’s some good news: global economic confidence has rebounded strongly and now stands at its…
Here’s some good news: global economic confidence has rebounded strongly and now stands at its highest level since 2009.
This according to the latest Global Economic Conditions Survey (GECS) from ACCA (the Association of Chartered Certified Accountants) and IMA (Institute of Management Accountants).
There has been strong growth in global confidence since the start of 2017.
GECS 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.
North America Rebounds Stongly
This new survey found that confidence in North America rebounded strongly in the first quarter of 2018, with 38% feeling more confident about the future, compared with just 26% who were less confident.
Although confidence improved in both the U.S. and Canada, the recovery in Canada was especially marked and confidence there is now at a record level.
“The outlook for the global economy is as good as it has been for some time,” said Warner Johnston, Head of ACCA USA.
“Recent tax cuts have provided a boost to confidence and will help to ensure that the economy grows by a decent 2.5-3% this year. With the economy doing well and the unemployment rate at a multi-year low, interest rates look set to rise. But with inflationary pressures relatively weak, rate increases are likely to be gradual,” Johnston said.
Tax Cuts Boost Confidence…
The report notes that the increase in confidence in the United States—at its highest level since Q1 2017–comes on the heels of significant tax cuts which should help boost consumption, increase wage growth, and prompt lower unemployment rates.
However, the Possibility of a Trade War May Threaten the Good Mood
Raef Lawson, Ph.D., CMA, CSCA, CPA, CFA, IMA vice president of Research and Policy and Professor-In-Residence cautioned that the biggest risk to the overall outlook is the possibility of a trade war between the United States and China, given proposed measures including tariffs, which could escalate tension and impact other regions globally. If this does not occur, the global economy likely would see another year of strong growth.
“Since the start of the year, policymaking in the U.S. has taken a more protectionist turn, causing concern about a possible trade war with China,” Lawson said, noting China’s recent announcement of counter-tariffs. “It is possible that this response by China could escalate the crisis as the U.S. government is no longer willing to abide large imbalances in trade cause by unfair trade policies.”
This is especially good news since this economic confidence is worldwide.