ACCA economic report: High uncertainty, slow growth for 2024

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.

The report examines three trends to watch closely and interviews chief financial officers from across the globe.

Jonathan Ashworth, chief economist at ACCA and author of the report, 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."

Ashworth said the busy political calendar, with elections scheduled in around 60 countries, including the US, the UK and India, as well as the European Parliament, adds a sizeable degree of uncertainty and potential volatility.

He said it could be risky for central banks to declare imminent victory in their battles against inflation but suggested upside risks to the global economy could come from continued, rapid improvements on the inflation front.

"This could pave the way for quite an early and significant easing of monetary policy by central banks," he said, but warned 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

– Signs of rising geo-economic fragmentation

– Developments with artificial intelligence (AI).

"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 and growth in economies," he said.

Meanwhile, caution was the watchword from CFOs, given the challenging global economic backdrop, geopolitical developments and elections in many countries.

Some businesses were naturally less affected by cyclical economic developments, but a number were affected 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.