Business confidence in Pakistan is at a three-year high, according to the recently released Global Economic Conditions Survey (GECS) for the first quarter of 2014.
Issued every quarter by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA), the survey says business confidence in the country has been on the rise almost steadily for a year and a half.
UK-based ACCA claims GECS is the largest regular economic survey of accountants worldwide, which gauges the views of ACCA and IMA finance professionals with regard to prevailing economic conditions.
Globally, business confidence crossed over into the positive territory for the first time in five years, according to GECS for the first quarter of 2014. However, it added the global recovery is ‘flawed’ and ‘fragile’.
The first-quarter results for Pakistan show that 43% of respondents reported confidence gains, up from 36% in late 2013. About 30% of respondents reported confidence loss, down from 41% in the previous quarter.
However, the fundamentals do not fully support such confidence levels for the time being, although they do point to a recovery from the uncertainties of the electoral cycle. The macro-economic outlook is positive, but perceptions of the recovery appear to have reached a ceiling in late 2013, the survey revealed.
In the first quarter, a majority of respondents – 55%, unchanged from the fourth quarter of 2013 – were optimistic about the state of the economy while 39% were pessimistic, up from 34% in late 2013.
Furthermore, cash flows, demand conditions and access to growth capital tightened marginally in the first quarter of 2014. Respondents’ outlook for business opportunities remained unchanged from late 2013, it said.
Respondents reported falling inflation and foreign exchange rate volatility in early 2014. “While this is a positive development, the medium-term trend still appears to be towards deterioration in this area,” it stated.
Three-quarters into the post-election period under the Nawaz administration, respondents have reported improved energy supply for the industrial sector and now expect more prudent fiscal policy in the medium term.
As a result, respondents revised their views on government policies dramatically upwards in early 2014, marking January-March a third consecutive quarter of rising approval. As a result of this, business capacity building in Pakistan strengthened significantly for a second consecutive quarter and is now stronger than at any point over the last three years, the survey said.
Globally, more than half of the GECS respondents – 58%, up from 55% in late 2013 – were optimistic about the state of their national economies, as they reported that an economic recovery was under way or about to begin. The pessimists made up 38% of the sample, down from 42% in the previous quarter.
Published in The Express Tribune, May 17th, 2014.