People’s trust in economy slumps

Three out of five respondents in consumer confidence survey term economy weak

ISLAMABAD:

As Ishaq Dar, who is poised to take over as new finance minister, on Tuesday spelt out his topmost priorities to provide relief to the inflation-stricken people, a new consumer survey showed a sharp decline in people’s trust in the economy and pessimism about the future economic outlook.

Compared to March this year, when the reading was not encouraging but better than today, hopelessness was seen among survey respondents regarding the current state of economy as three out of five rated the economy as weak, according to the Consumer Confidence Index Survey conducted by Ipsos – a market research firm – from September 7 to 12.

The survey revealed that inflation and unemployment were the top concerns, with floods becoming the third in line.

Dar briefly laid out his priorities during a visit to parliament – his first in five years. He ended his self-exile and reached Pakistan on Monday to take reins of the Ministry of Finance from outgoing finance minister Miftah Ismail.

“Artificially low value of the rupee, high inflation and utility prices are the biggest challenges facing the economy,” said Dar while responding to a question from the media. Dar, known for his hard views on keeping the currency stronger, said that since his arrival in Pakistan, the value of the rupee had improved by Rs9 to a dollar in the open market that reduced Rs1.35 trillion of debt.

He gave a message to currency speculators, saying they should set their direction right, as their time to manipulate the rupee was over.

The rupee also improved by more than Rs6 to a dollar in inter-bank dealings in two days, without any change in economic fundamentals, underscoring that the currency was manipulated by the speculators due to weak oversight by the central bank and the Ministry of Finance.

Survey findings showed that nine out of 10 Pakistanis believed that the country was heading in the wrong direction – a ratio that was eight out of 10 in March 2022.

After hitting an all-time high in September 2021, the perception of current economic situation has hit the rock bottom, with only 3% considering it to be strong, according to the Ipsos findings.

Over one-third of the respondents said that the economy had neither strengthened nor weakened. For the remaining 61% of respondents, the economy was weak – a ratio that was 51% in March this year.

The survey showed that inflation was the most worrying factor for the Pakistanis, followed by unemployment and the flood situation.

An overwhelming majority of 93% expressed concern over their job security given the current economic situation. In comparison, the ratio was 86% in March.

Increase in electricity prices and the burden of additional taxes were the two other top concerns for the people, who were bracing for 27% inflation and paying nearly half of their income in direct and indirect taxes. Pakistan’s economic condition has remained vulnerable for the past many years. Survey findings confirmed that the people’s personal financial situation did not improve much.

There had been growing concern that the top-to-bottom approach to make people rich was not working around the globe amid renewed emphasis on making direct intervention to support the lower and middle-income groups.

Over three-fourths of Pakistanis believed that the economy of their locality would weaken further in the next six months, showing increased desperation. Only 7% held a hopeful view that the economic conditions would improve.

Hardly 2% of Pakistanis rated their personal financial situation as strong during the past six months, which had been the lowest reading ever. About 61% of respondents said that their personal financial situation was weak while the remaining said it was neither strong nor weak.

Survey results revealed that consumers were not confident and were reluctant to make investment decisions, besides having doubts about saving money and investing in their future.

Also, 93% of respondents felt less confident about their ability to save money and invest in their future. The remaining 7% were comfortable, which was the lowest-ever level.

Compared to a year ago, about 95% of Pakistanis were feeling less comfortable about purchasing major items like cars and homes, which was the lowest ratio.

Published in The Express Tribune, September 28^th, 2022.

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