Global economic outlook for Pakistan remains positive: Global Economic Conditions Survey

The global economic outlook remains positive, despite a slight drop in confidence, compared to the last couple of years, according to the latest Global Economic Conditions Survey (GECS) released on Friday.

The quarterly survey of finance professionals including CFOs, conducted by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA), found that 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 yearsand better than the average since the survey began.

North America was the most confident region in Q2, followed closely by South Asia. Confidence levels are lowest in the Middle East.

Confidence has fallen in both Organisation for Economic Co-operation and Development (OECD) and non-OECD economies. The confidence is higher in non-OECD economies than in OECD economies for only the second time since 2011. Economic confidence in the UK has plummeted in the second quarter, due to political uncertainty, and is now at its lowest level since the final quarter of 2011.

Developed economies have continued to grow at a decent pace, but emerging economies have reported much bigger improvements. The economies of Brazil, Russia, India and China are all now growing simultaneously for the first time in over two years.

According to the survey, after a number of challenging years, the outlook for Pakistan is also improving. Two main factors are likely to support growth over the next few years. The first is increased Chinese investment in infrastructure projects as part of the China-Pakistan Economic Corridor (CPEC).

All the projects added together are expected to come to US$62bn, which is the equivalent of 17 percent of Pakistan's 2015 Gross Domestic Product (GDP). Low interest rates, which have been slashed over the past few years in response to a sharp fall in inflation, will also boost growth.

ACCA's Senior Business Analyst, Narayanan Vaidyanathan, said, “Healthy employment prospects in the US with reasonable real wage growth will help. Meanwhile, the Eurozone may benefit from easing austerity, and investor confidence after parties opposing the European Union failed to deliver in recent elections.”

Raef Lawson, Executive Vice President at IMA, said, “A combination of a gentler than expected slowdown in China and consumption growth driving recovery in the US and elsewhere has led to a fairly positive global outlook for this quarter.”

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