Despite positive signals of economic improvement, the Association of Chartered Certified Accountants (ACCA) remains cautious in its outlook for the global economy in 2024. The recently released report, titled "2024 Global Economic Outlook: Slow Growth, High Uncertainty," sheds light on key factors contributing to the organization's reserved stance.
The World Bank forecasts reasonably healthy global GDP growth of 2.9% in 2024, primarily driven by emerging economies. However, the growth outlook for advanced economies, including the United States and Europe, is more subdued, with projections ranging from 0.7% to 1.5%. Jonathan Ashworth, the ACCA's chief economist, emphasizes the potential risks associated with the lagged impact of past monetary tightening and heightened geopolitical uncertainties, shaping a slow-growth trajectory for the global economy.
Ashworth acknowledges the possibility of a significant upside if there are rapid improvements on the inflation front, potentially leading to an early and significant easing of monetary policies by central banks. However, he cautions against prematurely declaring victory over inflation, as this could sow the seeds of higher inflation in 2025 and beyond.
The ACCA's report includes insights from interviews with seven CFOs from Asia, Europe, and Africa. The majority express cautious optimism or outright pessimism about the global economic prospects in 2024, with only one China-based finance chief expressing positivity.
The report identifies three key trends that could heavily impact economies and businesses in 2024. Firstly, there is concern about potential backsliding by governments on policies aimed at achieving a "green transition." Despite this, a fourth-quarter survey by the ACCA suggests that a significant portion of accounting and finance professionals expect governments to strengthen such policies in the coming year.
Secondly, the report highlights the rise of geoeconomic fragmentation, emphasizing the challenges posed by deteriorating global trade relations and restrictive measures by certain countries, particularly the ongoing impact of the U.S.-China trade tensions.
Finally, the report addresses the role of artificial intelligence (AI) in shaping the economic landscape. While acknowledging AI's potential for innovation, the report underscores the need for organizations to address gaps in adoption, including poor-quality data and outdated infrastructure. Contrary to concerns about job displacement, the report suggests that AI is unlikely to significantly impact the accounting profession.
The ACCA's report paints a nuanced picture of the global economic landscape in 2024, highlighting both opportunities and challenges. As uncertainties persist, businesses and governments must navigate these complexities to foster sustainable economic growth.
