ACCA predicts accelerated economic growth in 2017

Ghana is set to experience accelerated growth in the year ahead compared to previous years, according to the latest Global Economic Conditions Survey by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA).

The improving prospects of the Ghanaian economy has been matched by a pick-up in the confidence index in Q4, with businesses particularly optimistic about the possibility of a big fiscal boost, explains Norman William, ACCA’s Portfolio Head, East/West Africa.

“Ghana’s December elections passed smoothly, cementing the country’s reputation as one of Africa’s most resilient democracies. New President Nana Akufo-Addo will very likely look to loosen fiscal policy, but he will be limited by the strict terms of Ghana’s deal with the IMF, which aims to put Ghana’s fiscal position on a more sustainable footing,” he said.

“GDP growth in Ghana is set to accelerate sharply in 2017 as new oil and gas fields come on stream. The economy will also get a boost from falling inflation, which will boost consumers’ purchasing power and give the central bank room to cut interest rates.”

The new government is also set to reduce certain categories of taxes to ease the burden on companies and this is expected to drive further growth in the private sector.

Global findings

The survey suggests that global business confidence in Q4 has dropped amid on-going political and economic uncertainty caused by:

Government investment falling to its lowest level since the start of 2016, with many developed markets still firmly in austerity mode
Changes in the political landscape stemming from the recent US election
Uncertainty over US / China trade developments
Concerns over Brexit as well as forthcoming European Elections
The survey of over 4,500 finance professionals and business leaders worldwide has found that while the economic outlook has improved slightly in the US and China over the last quarter, the Eurozone has hit its lowest confidence levels since 2011.

Almost half (44 per cent) of respondents expressed concern over falling income due to low levels of government expenditure, with another 43 per cent reporting worsening business confidence.

The African continent is amongst the regions citing declining incomes as their biggest concern alongside the Middle East and Latin America. 40 per cent of respondents cited the negative impact of exchange rate movements, which reflects the volatility of the world’s major currencies.

Commenting on the findings, Faye Chua, Head of Business Insights at ACCA, said: “Current political uncertainty is clearly having an impact on global business confidence. In the US, the Trans-Pacific Partnership is unlikely to be ratified while likely restrictions on trade with key markets, including China and Mexico, are also major factors here.

In Europe, uncertainty over the outcome of elections in the Netherlands, France and Germany – which could lead to major policy shifts for regional trade and the future direction of the Eurozone – all contribute to a gloomy outlook going into 2017.

However, it is not all bad news. Despite these concerns, the global economy may be on course for growth in 2017 as China responds positively to its economic stimulus programme and the US maintains a partial recovery.”

Faye Chua says that this research points towards a ‘new Age of Uncertainty’: “A strengthening US dollar could have significant impacts for trade-dependent economies such as Taiwan, Hong Kong, Singapore and Vietnam as well as impact on capital investments for emerging markets such as South Africa, Colombia and Turkey. Yet emerging markets are also less dependent on the dollar than before, so we are unlikely to see a repeat of the crises of the 1990s.

What our findings highlight is that businesses and economic forecasters feel that 2017 could mark a new Age of Uncertainty for the global economy. On a positive note, some of the underlying strengths of OECD and non-OECD economies suggest growth can be maintained and even improved over the next few years.

However, there is no escaping that this is a challenging economic environment. There are prospects of decent growth but risks remain.”

Fieldwork for the Q4 2016 GECS took place between 24th November and 13th December 2016 and attracted 4,551 responses from ACCA and IMA members around the world, including more than 350 CFOs.