Business confidence in Malaysia strengthened in the first quarter of 2017 (1Q17), underpinned by rising commodity prices and improving trade prospects, according to a survey released today.

The survey, conducted by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA), found that the global economic sentiment has risen to its highest level 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, said the ACCA in a statement.

“Although the rise in confidence is relatively small by historical standards, it reflects an increase in gross domestic product (GDP) and prospects for international trade,” said ACCA Malaysia country head Jeyasothy Palakrishnar.

“This economic improvement also means the governments are able to continue to support growth through investment and expenditure, which is also boosting confidence.

“Amid global inflationary pressures, however, the potential for future exchange rate fluctuations for the ringgit is an area of concern for businesses in Malaysia,” he added.

The survey noted that the ringgit fell sharply last year, and although it has stabilised in recent months, the country’s high short-term debt means the currency remains vulnerable to any sudden shifts in investors’ risk appetites.

About 70% of respondents in Malaysia cited the uncertain outlook for the exchange rate is the main concern.

The survey also found that inflationary fears are putting pressure on global economies, with nearly half (46%) of firms reporting increasing costs as a cause for concern.

Despite this, there are significant improvements in employment and investment, with 22% of firms planning to create more jobs and raise capital expenditure, up from 16% and 14% respectively in 4Q16, said ACCA.

ACCA head of business insights Faye Chua said the global economy has so far proven resilient in the face of multiple policy challenges.

“The rise in confidence, combined with strong economic hard data, offers genuinely encouraging signs for the global economy with an increasingly optimistic mood in the US and a stimulus-led recovery in China driving prospects for world trade.

“This quarter demonstrates there are signs that the global economy is returning to a degree of health after some very tough years and the IMF (International Monetary Fund) is expecting global growth of 3.4% this year, the fastest rate since 2012,” Chua said, adding that the policymakers will have an important role in the coming months.

The fieldwork for the 1Q17 Global Economic Conditions Survey took place between Feb 24 and March 13. It attracted 1,334 responses from ACCA and IMA members around the world, including more than 150 chief financial officers.