Business confidence in Malaysia on the rise: ACCA/IMA survey

PETALING JAYA: The confidence level of businesses in Malaysia rose in the first half of 2017, according to the Association of Chartered Certified Accountant’s (ACCA) Global Economic Conditions Survey.
The quarterly survey of global chief financial officers and finance professionals, jointly conducted by ACCA and IMA (the Institute of Management Accountants), attributed the improvement to the economic benefits stemming from rising commodity prices and improving trade prospects.
North America’s increasingly confident outlook reflected upon the emerging markets, and comes in line with the global economic sentiments as global trade achieved its fastest rate of growth since 2015, amid promising signs of a sustained recovery.
Jeyasothy Palakrishnar, country head of ACCA Malaysia, said: “Although the rise in confidence is relatively small by historical standards, it reflects an increase in gross domestic product and prospects for international trade. This economic improvement also means the government is able to continue to support growth through investment and expenditure, which is also boosting confidence.
“This quarter demonstrates that there are signs the global economy is returning to a degree of health after some very tough years. The International Monetary Fund is expecting global growth of 3.4% this year, the fastest rate since 2012,” said Faye Chua, head of business insights at ACCA.
She said that this was a strong start against a fragile economic backdrop with threats looming against the economy stemming from uncertainty surrounding
geopolitical issues such as US trade policy under the new administration, eurozone banking crisis in the wake of key European elections and Brexit.
“Yet many of these fears have yet to be realised, and the prospect of increased government spending as austerity measures come to an end in many developed economies means that short-term prospects look bright. These are the clearest signs of a synchronised and sustained recovery since 2011, and we can reasonably expect that to continue over the next two quarters,” she added.
Despite this, the starters are encouraging and optimistic, Chua said, citing the mood in the US and a stimulus-led recovery in China driving prospects for world trade.
However, the survey also found that there are inflationary fears putting pressure on global economy with nearly half (46%) of firms surveyed reporting increasing costs as a cause for concern, in spite of significant improvement in employment as it was noted that 22% of the surveyed firms were planning to increase job opportunities by 16% in the fourth quarter of 2016 and raise capital expenditure by 14%.
“Amid global inflationary pressures, however, the potential for future exchange rate fluctuations for the ringgit is an area of concern for businesses in Malaysia,” said Jeyasothy.
Chua said it is crucial to see how policymakers respond to the uncertainty and growing inflationary pressures.
Fieldwork of the survey was carried out between Feb 24 and March 13 and attracted 1,334 responses from ACCA and IMA members around the world.