Falling business confidence

The latest survey conducted by the Overseas Investors Chamber of Commerce and Industry (OICCI) has unveiled alarming figures regarding Pakistan’s Business Confidence Index (BCI), highlighting a severe decline that demands immediate attention. The significant drop of 21 percentage points to -25% in March-April, compared to the -4% recorded just months earlier, paints a bleak picture for Pakistan’s economic prospects.

The top three threats to business growth identified in the survey — high inflation, high taxation and devaluation — are all critical issues that require immediate attention from policymakers. The adverse effects of these factors on businesses have been widely acknowledged, leading to a loss of confidence and hindering the growth potential of the economy. Factors such as foreign exchange shortages, hyperinflation, high interest rate and rapid currency devaluation have severely impacted businesses and hampered import operations. It is imperative for policymakers to recognise the gravity of these challenges and develop comprehensive strategies to address them effectively. Focus should specifically be made on stabilising the currency, above all else. Furthermore, efforts should be directed towards removing barriers for foreign investors, fostering a culture of transparency and enhancing the ease of doing business. Collaboration between the government and the private sector is vital in formulating and implementing targeted solutions. It must also be noted that political instability greatly adds to economic distress, creating doubt and resistance among foreign investors.

Pakistan stands at a critical juncture, where immediate action is required to restore faith in the economy. By taking prompt and comprehensive steps to address the concerns raised in the OICCI survey, Pakistan can create a favourable business environment, attract investment and stimulate sustainable economic growth in the long run. Failure to act decisively risks further erosion of business confidence, hindering the nation’s progress and prosperity.

Published in The Express Tribune, June 16^th, 2023.

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