ISLAMABAD: Geopolitical tensions, rising energy prices and inflation have emerged as major threats to global economic growth, while increasing business costs and concerns over higher interest rates are adding pressure to the global business environment.
According to a survey conducted by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA), finance professionals across Asia-Pacific and other regions are facing challenges including economic uncertainty, supply chain disruptions and shortages of skilled workers.
The ACCA report found that 24.1% of finance professionals in Asia-Pacific identified geopolitical instability as a major risk to businesses and the economy.
Meanwhile, 62% of respondents in the region reported rising business costs, raising concerns about pressure on corporate profitability, investment decisions and consumer purchasing power.
The survey also found that 41% of finance professionals in Asia-Pacific expected interest rates to increase over the next three months. Globally, nearly half of finance professionals expressed similar concerns.
Experts warned that if inflation and energy prices continue to rise, central banks may increase interest rates further to contain inflation. This could raise borrowing costs for businesses and potentially slow investment.
According to the ACCA and IMA survey, around 70% of accountants worldwide reported an increase in business costs. Rising expenses for production, energy, raw materials and other operational requirements are placing additional financial pressure on companies.
The report cautioned that businesses passing these additional costs on to consumers could lead to further increases in the prices of goods and services, potentially weakening consumer demand.
Despite declining business confidence in Asia-Pacific, new orders improved for the second consecutive quarter, providing a positive signal for business activity across the region.
The report identified supply chain disruptions, shortages of skilled workers and uncertainty in the global economy as significant obstacles to business growth.
It also highlighted global investment in artificial intelligence (AI) as an important driver of economic growth in Asia-Pacific.
Investment in AI and advanced technologies could improve productivity, business efficiency and innovation. However, the report noted that developing workforce skills and improving access to technology would be essential to fully realise these benefits.
The ACCA report also identified further increases in energy prices and the potential weather-related effects of El Niño as risks to the global economy.
Higher energy prices could increase industrial and transportation costs, while weather-related disruptions could affect agricultural production and food supplies, adding to inflationary pressures.