Despite fall, inflation top concern

IPSOS survey reveals fragile economic confidence, low optimism about future

ISLAMABAD:

Despite the inflation rate slowing to a six-year low, it remains the top concern for households, with 65% of respondents stating that economic conditions are still fragile, according to a new opinion survey by a foreign firm.

IPSOS, a Paris-based surveyor, in its latest Consumer Confidence Index, reported that inflation remains the single most worrisome issue for Pakistanis. However, it noted that economic concerns have eased in 2024, with the number of people citing inflation as their biggest concern dropping by 16%.

Still, 69% of respondents identified inflation as their primary concern, followed by unemployment and increasing poverty. The rising tax burden ranked as the fifth most troubling factor for households.

The Pakistan Bureau of Statistics (PBS) reported this week that inflation eased to 4.9%, the lowest rate in six years. The decline was attributed to an inflated base of goods coupled with reductions in the prices of non-perishable goods.

IPSOS also stated that an overwhelming 79%—four out of every five people—believed Pakistan was heading in the wrong direction. Only one in five Pakistanis thought the country was on the right track.

The survey was conducted in November during clashes between protestors and law enforcement agencies when Pakistan Tehreek-e-Insaf (PTI) sympathisers attempted to reach D-Chowk despite a court order barring entry into the red zone of the Islamabad Capital Territory.

The IPSOS findings revealed that females were more pessimistic about the country's direction than males. Only 14% of women saw the country moving in the right direction, compared to 23% of men.

Nevertheless, the survey showed that optimism about Pakistan's direction has nearly doubled in the October-December quarter, reaching 19% compared to 11% in the third quarter. This marks the highest level of optimism in 36 months, though still below the one-in-five optimism rate recorded in March 2022.

Similarly, one in three Pakistanis perceived the country's economic condition as strong or moderate, with males, urban residents, the highly educated, and the middle class appearing more optimistic. However, two-thirds of Pakistanis described the economic conditions as weak, with 86% of males and 90% of females believing the economy has deteriorated.

Among post-graduate respondents, 85% said the economy was in weak condition.

According to the survey, Pakistan sees its external sector showing signs of stability with a low current account deficit, improved export and remittance performance. While the exchange rate has also remained stable, Pakistan's deputy prime minister remarked that the rupee's current value is artificially high and should not exceed Rs240.

When asked if they felt more comfortable making household purchases compared to a year ago, 93% of respondents said they were still uncomfortable.

Future expectations

Looking ahead six months, only one in four respondents expected improvement in the local economy. Half of those surveyed foresaw no improvement, though distrust levels dropped from the 70% seen in the previous quarter.

Optimism about financial conditions remains low, with only one in five Pakistanis expecting improvement in the next six months. Pessimism about financial conditions fell from 67% to 58%.

Compared to a year ago, 86% of respondents still lacked confidence in making investments in Pakistan

Confidence in the ability to make major purchases also remains dismal, with only 4% of Pakistanis feeling comfortable making such purchases during the July-October period. A staggering 96% expressed reluctance to make major expenditures.

The Special Investment Facilitation Council (SIFC) continues its efforts to attract foreign investment and bolster local investor confidence. However, prevailing political, economic, and security challenges, coupled with inconsistent policies, hinder investment efforts.

Additionally, 85% of respondents expressed concerns about job security as economic growth prospects remain low, with the large-scale manufacturing sector struggling to achieve significant growth again.