Pakistan Reader# 193, 3 September 2021
Business Confidence Index turns forward-looking from pessimistic innings with which the new government startedAnkit Singh
On August 24, Business Confidence Index (BCI) survey- Wave 2020 reported a net 59 per cent change in BCI from the previous negative 50 per cent score in the Wave 2019 survey to a positive 9 per cent for overall BCI. The sectors leading the improvements were manufacturing and services while retail/hole sector remained a dampener.
The survey was conducted by Overseas Investors Chambers of Commerce and Industry (OICCI), the oldest and largest investment chamber of Pakistan representing 35 different countries and 14 different sectors of trade and industry.
Survey methodology and its findings
The survey is done face to face and across the country in nine cities. It covers 80 per cent of GDP, with higher weights given to key business centres of Karachi, Lahore, Rawalpindi-Islamabad and Faisalabad. The growing confidence of the business community is driven by all the three sectors, with the first two recordings an increase of 65 percentage points each – manufacturing from -48 per cent to 17 per cent and services from -59 per cent to 6 per cent. The retail/wholesale sector went up 44 percentage points from — 44 per cent to zero. Most of the experts has termed this improvement as a dramatic turnaround. It is to be noted that the findings are a projection of the future rather than the present state of being. Many have credited the 2021-22 budget; it has proved to be an important medium due to which the policies and regulations have become more transparent. According to OICCI CEO M Abdul Aleem, the three major threats to business growth identified by survey respondents are corruption (67 per cent), volatile energy costs (66 per cent) and currency devaluation (60 per cent). Overall, the BCI survey has brought in the moving forward spirit in the business community.
What about consumer confidence index?
According to Gallup Pakistan survey, the consumer confidence index (CCI) is scored between zero to 200 as per their methodology and evaluation. According to its findings, the CCI has remained below 100 since the first quarter of 2020, at the time of publishing of the report, the overall CCI stood at 88.0. As per the index developed by Gallup, the score lies in the category of 75-99, which is pessimistic.
Another survey by Gallup Pakistan finds that 61 per cent of Pakistani believed that their savings had decreased since the last six months from August 2021.
Another separate survey by Gallup Pakistan on BCI exposits three strands of BCI, one based on current business situation score (Poor), another on the future business score (great confidence) and the last one on the direction of the country score (fair confidence).
The future has not been quantified in any of the reports by OICCI or Gallup Pakistan. The future related policies on business or economy have not set the sight on long-term improvement in macro health. Loadshedding and power crises have turned back when manufacturing and industries reached their original capacities, however, first CPEC power transmission project became functional in Matiari, Punjab on 1 September. It is pertinent to look after consumer confidence so that the growth is consumption-led rather than determined by supply.
Kazim Alam, "Survey finds ‘record improvement’ in business confidence in Pakistan," Dawn, 24 August 2021
Usman Hanif, "Business confidence rises significantly," The Express Tribune, 24 August 2021
D&B and Gallup Pakistan, "Pakistan Consumer Confidence Index (CCI) Results of Q2 2021 Survey," The Gallup Pakistan, 02 August 2021
"BUSINESS CONFIDENCE INDEX (BCI) GALLUP PAKISTAN 2 nd Quarter 2021 Report," The Gallup Pakistan, 03 August 2021