The latest ACCA (the Association of Chartered Certified Accountants) and IMA (Institute of Management Accountants) Global Economic Conditions Survey (GECS) reveals a slight improvement in global confidence among accountants and finance professionals in Q2 2024. The Asia Pacific region, including Malaysia, has shown notable resilience, providing key insights into regional economic trends and risk priorities.
Asia Pacific Highlights Growth Amid Global Fluctuations
In Q2 2024, confidence in the Asia Pacific region increased modestly, building on substantial gains from previous quarters. This region is benefiting from improvements in the global economy, particularly in the manufacturing and technology sectors, which have significantly boosted the New Orders Index. Confidence in Asia Pacific now stands well above its historical average, reflecting the region’s robust economic activity.
The New Orders Index in Asia Pacific saw a very sharp increase, significantly above its historical average. This surge highlights strong demand and an optimistic outlook within the region’s economies. The technology sector’s upward cycle and improvements in manufacturing are key contributors to this positive trend.
Top Risk Priorities in Asia Pacific
For the first time in a year, the economy is not the top concern for respondents in the financial services sector, although it remains a close second for the corporate sector. Cybersecurity has emerged as the third-highest risk priority across all sectors, highlighting growing challenges in managing digital threats amid increasing uncertainty. Jonathan Ashworth, Chief Economist at ACCA, noted: “The GECS points to some further improvement in the global economy in Q2. Further signs of a pickup in the important Western European and Asia Pacific regions are encouraging, although the decline in the North American and U.S. indices bear watching closely.”
“Despite the resilience of the global economy so far in 2024, many important downside risks and challenges remain. Sticky inflation could limit central banks’ scope for monetary easing, while geopolitical and political risks remain very elevated and will continue to create significant uncertainty,” he added.
Malaysia’s Economic Context
Malaysia, as part of the Asia Pacific region, has mirrored these positive trends. The country’s manufacturing sector has seen a notable uptick, driven by increased global demand and advancements in technology. The Malaysian government’s recent initiatives to boost the digital economy and enhance infrastructure have further supported this growth. Key policies such as the National Investment Aspirations (NIA) and the Malaysia Digital Economy Blueprint (MyDIGITAL) have been instrumental in driving economic resilience.
Recent Malaysian Policies Influencing Economic Confidence
Recent Malaysian policies have significantly influenced economic confidence. The Ekonomi MADANI framework, which includes the New Industrial Master Plan (NIMP) 2030 and the National Energy Transition Roadmap (NETR), has provided a robust foundation for economic growth. These policies aim to drive industrialisation, enhance energy sustainability, and foster a digital economy, aligning with Malaysia’s long- term economic goals. Malaysia’s 2024 budget, the largest in the nation’s history, has introduced several structural changes, including the implementation of a capital gains tax and measures to enhance tax compliance through e- invoicing starting in August 2024. These reforms are expected to support fiscal consolidation and economic stability.
Current Economic Confidence and Global Trends
Malaysia’s economic confidence aligns with global trends, showing resilience and growth despite global economic uncertainties. The Business Confidence Index (BCI) in Malaysia increased to 94.30 points in the first quarter of 2024, up from 89 points in the previous quarter. This reflects a positive outlook among businesses, driven by strong domestic demand and supportive government policies.
Main Drivers of Malaysia’s Economic Growth
As of July 2024, the main drivers of Malaysia’s economic growth include: Manufacturing Sector: Boosted by global demand and technological advancements. Digital Economy: Enhanced by initiatives under MyDIGITAL. Private Sector Spending: Supported by firm domestic demand and government policies. Infrastructure Development: Driven by the NIMP 2030 and NETR frameworks.
Impact of Recent Data Points on Local Business Confidence
Recent data points have positively affected business confidence locally. The SME Sentiment Index showed an increase, reflecting optimism among Micro, Small, and Medium-sized Enterprises (MSMEs). This improvement is attributed to better economic expectations, improved cash flow, and stronger liquidity buffers among MSMEs. Additionally, Malaysia’s GDP growth forecast for 2024 is set at 4 to 5 percent, up from 3.7 percent in 2023, further bolstering business confidence.
Key Global Insights
Overall confidence among global accountants improved slightly in Q2 2024, just above its historical average. Key global indicators, including Capital Expenditure, Employment, and New Orders, showed positive trends, with the New Orders Index particularly strong in Asia Pacific. While Western Europe experienced another decent increase in confidence, driven by continued recovery in the euro area and UK economies, North America saw a significant decline. This fall was more pronounced in the U.S., suggesting a slowdown in economic growth and raising the likelihood of the U.S. Federal Reserve easing monetary policy after the summer.
The proportion of global respondents reporting ‘increased costs’ eased in Q2 but remained high by historical standards. Cost pressures in Asia Pacific remained largely unchanged, continuing to challenge financial professionals in the region.
