Karachi: Dun & Bradstreet Pakistan and Gallup Pakistan have issued their report on the ‘Pakistan Consumer Confidence Index (CCI)’ for Q4 2020, which shows a boost in consumer confidence.

The Consumer Confidence Index remained 90.3 points in Q4 2020, compared to 88.7 points in Q3 2020, translating into a 1.8 % quarter-on-quarter increase. This was driven by the improvement in the Current Situation, up 14.9 % q-o-q, which was magnified by a recovery from a low base, as sentiments were severely dampened during the past 6 months due to COVID-19.

In contrast, Future Expectations deteriorated for the first time since Q1 2020, due to cautious optimism by individuals because of prevailing uncertainty amid a resurgence in COVID-19 cases. Moreover, the overall consumer confidence in Pakistan has remained pessimistic in all four quarters of 2020.

The CCI report has been developed by assessing Consumers’ Confidence about the economy as well as their personal financial situation. The Index covers four key parameters i.e., Household Financial Situation, Country’s Economic Condition, Unemployment, and Household Savings. The Index is a reflection of the ‘Current Situation’ (economic changes felt in the last six months), as well as ‘Future Expectations’ (changes expected for next 6 months) of consumers across the country. The CCI ranges from 0 to 200, with 100 as the neutral value. A score of less than 100 indicates pessimism.

During this survey, optimism has improved for Household Financial Situation, Country’s Economic Situation, and Unemployment, while it has declined for Household Savings. This is primarily attributed to consumers’ concerns about Future Household Savings. This could have a cascading effect on asset-related investments in the country, and overall spending by consumers. Perceptions about the Country’s Economy have improved consistently across all four quarters of 2020, highlighting upbeat consumer sentiments.

Household Financial Situation was the most optimistic parameter, implying people’s household income seems to be rising after a decline due to COVID-19. During Q4, Household Financial Situation was the only CCI parameter to turn overall optimistic, owing to improvement in Current Situation. Meanwhile, 33 % of consumers believe that their income levels will improve in the next 6 months in Q4 compared to 30 % in Q3, 28 % in Q2, and 32 % in Q1.

In contrast, rising Inflation and, more importantly, Unemployment continue to drag consumers’ enthusiasm, as Unemployment remained the most pessimistic parameter. Despite an increase in overall optimism regarding Unemployment, 3 out of 4 (73 %) respondents believed that Unemployment has increased in the last six months, as compared to 77 % in Q3. During the Q4 survey, 93% of consumers believed that daily essentials have continued to become expensive/very expensive in the last 6 months, compared to 91 % in Q3. On the whole, consumers across all provinces, locations (Urban and Rural), and different age groups were relatively more optimistic for the Current Economic Situation, than they were during the Q3 2020 survey.

Nauman Lakhani, Country Lead of Dun & Bradstreet in Pakistan stated: “The fourth issue of Pakistan Consumer Confidence marks the end of the calendar year 2020. The report compares changes in Consumer Confidence from Q3 2020 to Q4 2020. Current Consumer Confidence growth of almost 15 % as compared to the last quarter is healthy, showing signs of recovery in Pakistan, but consumers were cautiously optimistic as Future Expectations have declined by 6.0% as compared to Q3. I envision this Index to become a barometer of economic well-being in the Country in the years to come.”

Bilal Ijaz Gilani, Executive Director Gallup Pakistan, added: “At the end of 2020, the Pakistani Consumer, whose pulse we measure in this CCI series, is cautiously optimistic about the future. The main drain on the household economy is the continually felt heat of inflation and concerns about rising unemployment. We at Gallup believe that the real challenge is not to revive the economy to pre-Covid times; we seem to be quite close to that already. The challenge is, rather, to resuscitate the economy to a galloping pace – the jury is still out on if the current upward trajectory is going to meet this ambitious goal.”

Hamza Habib is a senior journalist who has previously worked for leading newspapers and TV networks of the country. He mainly writes on the economy and political issues.

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