At a time when the global economic scenario is not so encouraging, the Association of Chartered Accountants (ACCA) and Institute of Management Accountants (IMA) in its report released on Friday said business confidence in India has increased in the first quarter of 2017. The report also accepted that demonetisation was one of the causes in slowing down economic activity. 

The report said the quarterly survey of global chief financial officers (CFOs) and  finance professionals has found that global economic sentiment has risen to its highest levels since 2015 amid promising signs of a sustained recovery. The rise has been spearheaded by an increasingly confident outlook in North America and is reflected across leading developed and emerging markets. In particular, there has been the fastest rate of growth in global trade since 2015.

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Commenting on the findings of the report, Sajid Khan, head of international development at ACCA said, "While the demonetisation campaign caused a slowdown in economic activity ~ which was a risk understood at the time ~ the increase in confidence this quarter reflects the underlying strength of the Indian economy." 

Khan added that the confidence level has been improving as businesses benefit from the government's recent economic reforms, "although securing prompt payment for small businesses remains an important priority". 

Moreover, the survey has found that inflationary fears are putting pressure on global economies, with nearly half (46 per cent) of firms reporting increasing costs as a cause for concern. Despite this there are significant improvements for employment and investment, with 22 per cent of firms planning to create more jobs and raise capital expenditure (up from 16 per cent and 14 per cent respectively in Q4 2016). 

Faye Chua, head of business insights at ACCA, added that policy makers will have an important role in the coming months. "This quarter demonstrates that there are signs that the global economy is returning to a degree of health after some very tough years: the IMF is expecting global growth of 3.4 percent this year, the fastest rate since 2012."