‘Business confidence stabilises after a dip’

OICCI releases survey results for third quarter of 2010.

KARACHI: A survey, conducted in October and November 2010, has indicated that business confidence, which took a sharp dip in the second quarter of 2010, has begun to recover.

The Overseas Investors Chamber of Commerce and Industry (OICCI) conducted the third quarter Business Confidence Survey and released its results on Monday.

The survey is an indicator of sentiments prevailing in the market and identifies the economic direction of the country, as well as factors that affect confidence levels of the business community.

The Business Confidence Index (BCI), which stood at six per cent in the first quarter, dropped to minus 27 per cent in the second. However, in the third quarter, it stabilised at minus 26 per cent.

While business sentiment was relatively better at the beginning of 2010, when organisations were laying out plans for upcoming months, it fell short of expectations in the second quarter. Additionally, the second quarter survey was conducted immediately after the budget, which may have contributed to lowering confidence levels. Likewise, the devastating floods may have dampened spirits in the third quarter.

The respondents of the survey felt that the global and local business situation is expected to remain unchanged in the next six months, which includes the first quarter of 2011, due to the persistent rise in inflation and the deteriorating security situation.

An overall business confidence comparison of the third quarter with the second quarter indicated the business confidence of OICCI members was up by eight per cent, while non-OICCI members showed negative confidence in business which dropped four per cent.

The survey also showed that employment has decreased in almost all sectors over the last nine months, with the exception of food and financial sectors, while the worst-hit segments were real estate and textiles.

Additionally, 70 per cent of respondents, from the manufacturing, services and retail sectors, were opposed to the idea of reformed general sales tax (RGST).

Published in The Express Tribune, February 22^nd, 2011.