Consumers show low confidence in Pakistan’s economy: survey

Country’s National Index score stands at 33.8 compared with India’s 62.9

Shahbaz Rana September 28, 2019

ISLAMABAD: People’s confidence in the economy has declined in Pakistan as compared to India and global trends but respondents still have hope for improvement in the situation in the next six months, according to an Ipsos opinion poll.

Ipsos - global market research and consulting firm - has conducted a survey in Pakistan for its first wave of Global Consumer Confidence Index (GCCI), generally known as the National Index.

The findings revealed that consumers had a very low confidence and were reluctant to make investment decisions but remained hopeful the situation would improve and did not see risks to their jobs.

People were questioned about their confidence in the economy, their opinion about the current situation compared to a year earlier, investment decisions and job prospects. The results are based on a score ranging from 0-100 and the index inching towards 100 means better sentiment. The survey was conducted in August.

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Survey results showed that people’s confidence in the economy was on the decline as the country’s score on the National Index stood at only 33.8 compared with India’s score of 62.9 and global average of 50.2.

Young people between the ages of 18 and 30 years showed more positive sentiment about the economy when compared with middle-aged and older people.

Similarly, the less educated people, including illiterates, exhibited less confidence in the economy than the educated lot with post-graduates showing the highest confidence, resulting in a score of 41.6, according to the opinion poll.

The confidence level was almost similar among urban and rural respondents.

Owing to the government’s economic stabilisation policies, the country is passing through a phase of low economic growth and higher inflation. A recent report by the Asian Development Bank showed that Pakistan would grow at a pace of only 2.8% while inflation was projected at 12% - the highest in South Asia.

Ipsos survey findings were in line with the prevailing sentiment about Pakistan’s economy where the lowest income groups were affected the most and political and economic uncertainties had shattered their confidence.

Results of the Ipsos research are based on primary data collected from the nationally representative sample of 2,800 people aged between 18 and 65 years during August 2019. The National Confidence Index was the lowest in Sindh while it was the highest in Balochistan and Khyber-Pakhtunkhwa.

The GCCI index is composed of four sub-indices - Current Conditions Index, Expectations Index, Investment Index and Jobs Index. The National Confidence Index was the lowest in Pakistan among 28 nations surveyed.

China enjoyed the highest National Index with a score of 73.7, Saudi Arabia 64.7, India 62.9 and Turkey 38.6.

The score on the Current Index, which showed a comparison between the current economic situation and a year ago, was the lowest at 19.5. This meant people’s confidence in the economy was better a year ago. Even the most educated class of the country also believed that the situation in August 2019 was worse than a year ago.

On the Expectations Index, the score was 43.7, suggesting that people still had hope for improvement in the situation in the next six months. But the score was still lower than the global average of 57.6 and India’s score of 69.5.

People are not willing to make personal investment decisions in the next six months due to an overall low trust in the economy, according to the poll.

On the Investment Index, the score was only 19.6, suggesting that the respondents would not invest in the near future. People, having higher qualifications and better social status, were also reluctant to invest their savings, according to the poll. India enjoyed a score of 63.6 in the Investment Index, showing people’s inclination to invest.

The respondents were still hopeful about the job situation in Pakistan. They answered questions such as whether anybody known to them lost job in the past one year or were there chances to lose job in the next six months.

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The score on the Jobs Index was 52.2, which was close to the global average of 58 but was lower than India’s score of 60.4.

Prime Minister Imran Khan has promised to create 10 million jobs in five years and build five million homes. But the government’s economic stabilisation policies have made it difficult to achieve these goals.

Although the International Monetary Fund and the government believe that the stabilisation phase would end in two years, there is still not a clear economic road map about how the government will ensure economic recovery after two years.

Published in The Express Tribune, September 28th, 2019.

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