The Global Economic Conditions Survey (GECS) has revealed that the eventual implementation of the Pakistan-China Economic Corridor, a bilateral project that will involve hefty Chinese investment into Pakistan's infrastructure network, will also create opportunities for local firms. The GECS was carried out jointly by Association of Chartered Certified Accountants (ACCA) and Institute of Management Accountants (IMA)- largest regular economic survey of accountants around the world.
According to the GECS, issued for second quarter of 2016 by ACCA, there was a clear rise in confidence in Pakistan in the second quarter, after it was dragged down in first quarter by security problems - most notably a terrorist attack in the country's second-largest city, Lahore, which killed more than 75 people in March. Businesses have continued to benefit from a series of aggressive rate cuts since 2014 - that most recent of which was made in late May. The eventual implementation of the Pakistan-China Economic Corridor, a bilateral project that will involve hefty Chinese investment into Pakistan's infrastructure network, will also create opportunities for local firms.
It revealed Pakistan business confidence rallies despite OECD woes. Latest quarterly global survey from ACCA and IMA reveals a subdued sentiment, with many more firms scaling back investment. Dip in confidence across the OECD linked to Brexit uncertainty, which is set to continue as the UK commences a complex multi-year process to extricate itself from the EU.
The report said that the global economic conditions continue to dominate business and political life. News and debates on economic issues are almost constantly the focus of media attention. While most national economies are now growing once again, it is far from clear how sustainable this growth is or how long it will be before a sense of normalcy returns to the global economy.
ACCA and IMA have been prominent voices on what the accounting profession can do to help turn the global economy around. Both bodies have published extensively on a range of topics, from the regulation of financial markets or the prevention of fraud and money laundering, to fair value or the role of international accounting standards, to talent management and the development of an ethical business culture. ACCA and IMA aim to demonstrate how an effective global accountancy profession contributes to sustainable global economic development; to champion the role of accountants as agents of value in business; and to support their members in challenging times. Both professional bodies believe that accountants add considerable value to business, and never more so than in the current environment.
As countries around the world continue to consider strategies to promote stability and stimulate growth, the interconnectedness of national economies, and how they are managed and regulated, is now under close scrutiny. The development of the global accountancy profession has benefited from, and in turn contributed greatly to, the development of the interconnected global economy. The fortunes of the two are tied. ACCA and IMA will, therefore, continue to consider the challenges ahead for the global economy, and focus on equipping professional accountants for the uncertain future, it said.
Accountants are particularly instrumental in supporting the small business sector. Small and medium-sized enterprises (SMEs) account for more than half of the world's private sector output and about two-thirds of all employment.
Both ACCA and IMA focus much of their research and advocacy efforts on articulating the benefits to SMEs of solid financial management and reliable financial information. OECD woes partially offset by improvements elsewhere with China looking less likely to suffer a large currency devaluation, and the US enjoying healthy consumer confidence and unemployment figures.
The latest Global Economic Conditions Survey from ACCA and IMA, released, offers an early indication of how uncertainty will effect OECD economies, with business confidence subdued despite an improving global outlook. Responding to the findings, Faye Chua, ACCA head of business insights, said.
Fears of global recession seem to have eased over the past quarter as China's currency stabilises, the US enjoys a consumer-led recovery and commodity prices have started to rise. Yet low levels of confidence across Europe in the run-up to the UK referendum has offset some of those fragile gains as jittery markets from the US, UK and across the emerging world suffer declines.
GECS showed that business confidence picked up a little, having hit a four-year low in the first quarter. The number of firms that said their prospects have deteriorated over the past three months fell to 43%, in quarter two, from 48 percent in quarter one.
Much of the global improvement has come from outside the OECD. Recent price rises have bolstered commodity-producing countries, especially in Africa and the Middle East, and this has in turn increased expectations of government spending.
The report said that the commodity prices recovery has taken pressure off a range of commodity-producing economies. Their currencies have been much more stable, which has in turn has eased concerns about ballooning foreign-currency debts. Currency stability should also mean that inflation cools in those economies, such as Russia and Brazil, where currency collapse in late 2014 pushed up import prices sharply. Central banks will also have less need to keep interest rates high to bolster currencies and contain inflation. Finally, in most commodity-producing economies the sharp drop in investment in resources that was necessary after prices collapsed has now bottomed out. But if the worst looks to be over, there are still several reasons to be cautious about the outlook for economies that are reliant on commodities.
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