KARACHI: The overall business confidence in Pakistan plunged to -12% in a survey carried out in December 2018, compared to the reading of +14% recorded in the previous survey held in May last year.
The Business Confidence Index (BCI) Survey Wave 17, carried out by the Overseas Investors Chamber of Commerce and Industry (OICCI) in December 2018, was largely influenced by a downward trend in the services sector and partially in the retail and wholesale trade sector.
The Business Confidence Score (BCS) in the services sector, which represented about 30% of the respondents, was -29% compared to +23% in the previous wave.
The BCS of retail and wholesale trade, representing 30% of the respondents, declined to -5% compared to +6% in the earlier wave.
In the manufacturing sector, which represented over 40% of the survey respondents, the BCS stood at -4%, a fall of 19 percentage points compared to the Wave 16.
Commenting on the BCI survey results, OICCI President Irfan Wahab Khan said “the negative business confidence in the current wave was largely anticipated.”
He attributed the rapid change in the economic landscape to severe pressure on the balance of payments and exchange rate. He referred to a significant rupee depreciation coupled with the hike in interest rate by the State Bank of Pakistan in November and the resultant higher inflation.
Khan, however, was of the view that the measures announced by the government in the recent supplementary finance bill were timely and provided some clarity about the policy direction.
“The measures are expected to re-engage and energise the business community towards accelerated economic and investment activity,” he stressed. “There is expectation that the government will collaborate with key stakeholders in the process of developing a robust economic recovery plan and good governance framework.”
The OICCI business confidence survey, conducted every six months, reviews the perception of business leadership in Pakistan, covering the business environment at regional, national, sectorial and business entity levels. The survey indicates the direction in which the economy is heading based on perceptions of key stakeholders of the business community, representing about 80% of GDP.
Published in The Express Tribune, February 2nd, 2019.