An inaugural annual economic prospects report by ACCA, examines the outlook and major risks for the global economy and key countries. The report, 2024 Global Economic Outlook: Slow Growth High Uncertainty, sets out the key events to watch in a year packed with elections; examines three trends to watch closely; and interviews chief financial officers (CFOs) from across the globe.
Commenting on this, ACCA chief economist and report author, Jonathan Ashworth, said: “The global economy looks set to grow slowly once again in 2024, and the risks are skewed to the downside. The lagged impact of past monetary tightening could lead to an even more pronounced slowing in growth, and geopolitical risks remain very heightened. The busy political calendar, with elections scheduled in around 60 countries, including the US, the UK, India, and the European Parliament, adds a sizable extra degree of uncertainty and potential volatility.”
Ashworth added: “It could be risky for central banks to declare imminent victory in their battles against inflation’ but suggested that: ‘Upside risks to the global economy in 2024 could perhaps come from continued rapid improvements on the inflation front, which could pave the way for quite an early and significant easing of monetary policy by central banks”.
But he warned that “this could risk sowing the seeds of higher inflation in 2025 and beyond”.
In addition to monitoring the usual ebb and flow of economic data, Ashworth suggested watching three key trends this year:
● Further backsliding by governments on policies to achieve the green transition
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● Signs of rising geo-economic fragmentation
● Developments with artificial intelligence (AI).
Ashworth said: “The first two could be particularly impacted by political developments through the year, and we will be watching for early signs that wider AI adoption is beginning to provide a much-needed boost to productivity growth in economies.”
Meanwhile, caution was the watch word from CFOs given the challenging global economic backdrop and the geopolitical developments and elections in many countries. Some businesses were naturally less impacted by cyclical economic developments, but a number were impacted by, or at risk from, structural changes related to trade, and supply chain issues. Most were experimenting with AI and other technologies in their businesses, while some noted the difficulty in attracting talent given the changing ways of working.