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Economic Confidence Remains High, Rebounds Strongly in the U.S.

The latest Global Economic Conditions Survey (GECS) from IMA® (Institute of Management Accountants) and ACCA (the Association of Chartered Certified Accountants) released this month found that global economic confidence remained relatively high at the end of 2017 despite a slight dip from the previous quarter, with an improved economic outlook in the United States and South Asia off-setting a more cautious mood in China. You can read the full report here.

The report found that economic confidence in Q4 2017 remained high relative to the last couple of years and should continue into 2018.While the global portrait was mixed, the scenario in North America illustrated significant improvement.

"The overall outlook for 2018 is a promising one in terms of global economic growth and confidence," said Warner Johnston, Head of ACCA USA. "Some of the signs of a global economic recovery in 2017 look set to continue, with improvements for developed and emerging markets."

Raef Lawson, Ph.D., CMA, CSCA, CPA, IMA vice president of research and policy, said, "Confidence in the United States has rebounded strongly, and is now at its highest level since the start of 2017. With growth expected to hit 3% this year, and recent tax changes raising hopes of further fiscal boost, over a third of respondents expect to see improving conditions. Yet, 25% feel less confident than in the previous quarter. In particular there are concerns, with near full employment, the recent corporation tax cut could lead to inflation rather than growth."

In North America, economic confidence improved significantly in the final quarter of the year, with 31% of respondents saying that they are more confident about the future, compared with 26% who are feeling less confident. This means that confidence levels are now high by historical standards.

The results of the GECS reflected a positive outlook for the U.S. economy, with all of the main sub-components of the index at elevated levels. Confidence rebounded strongly in the final quarter of the year: 33% of respondents felt more confident about the future, and just 25% felt less confident. Overall confidence levels were at the levels they reached at the start of 2017 and remained high by historical standards. This may in part reflect hope that the recent tax changes provide a fiscal-led boost to the economy, the report noted.

"For the U.S., high levels of consumer confidence, a booming stock market and the recent massive tax cut could lead to strong growth. Although its interest rates are likely to rise, the pace of tightening will be gradual and it is unlikely to derail the recovery," Lawson said.

Globally, the number of respondents expecting conditions to worsen now exceeds those expecting it to improve by 14 percentage points, the report notes. Additionally, the hurricanes in the Caribbean last September and falling oil prices in the Middle East have seen regional confidence fall sharply.

Fieldwork for the Q4 2017 GECS took place between November 24 and December 11, 2017, and attracted 4,011 responses from ACCA and IMA members around the world, including more than 250 CFOs. For more information on the global economic conditions throughout 2017, see the Q1, Q2, and Q3 GECS reports.
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