Survey says business confidence in Pakistan drops to negative 4%

Amid political and economic instability, the overall Business Confidence Score (BCS) in Pakistan stands at negative 4 percent, representing a decrease of 21 percent from the previous level of positive 17 percent found in the last survey.

The results announced by Overseas Investors Chamber of Commerce and Industry (OICCI) shows that the highest drop in confidence 24 percent was recorded in services sector followed by retail and wholesale trade 22 percent and manufacturing 20 percent.

A total of 42 percent respondents were from manufacturing sector, 33 percent from services and 25 percent from retail trade.

Despite recording a significant drop in confidence of 20 percent, the manufacturing sector recorded a net confidence level of positive 3 percent, whereas the services and retail sectors stood at negative 8 percent and 14 percent respectively.

The OICCI survey is conducted periodically face-to-face across the country in nine cities, covering 80 percent of the GDP, with higher weightage given to key business centres of Karachi, Lahore, Rawalpindi-Islamabad and Faisalabad.

It covers the business environment at regional, national, sectorial, and business entity levels in the past six months as well as the anticipated business and investment environment in the next six months.

Besides the alarming inflation and increased fuel prices, the currency devaluation also dampened economic activity. The record rains during August led to severe flooding in Sindh and other parts of the country which further restricted business activities.

Overall more than half (56 percent vs 19 percent in the previous survey) of the respondents were negative about the business environment in the past six months. Going forward, only net 2 percent against 18 percent in the previous one were positive for the next six months.

The sentiments of the OICCI members, the leading foreign investors who were randomly included in the survey, stood at positive 6 percent, substantially lower than the positive 33 percent in the previous wave. Foreign investors have in the past also shown higher confidence than non-members.

The three major threats to business growth identified in the survey are inflation 78 percent, high taxation 71 percent and currency devaluation 70 percent which could potentially slow down business growth in Pakistan.

Looking ahead, only 18 percent expect expansion in business operations, 2 percent in planning new capital investment and 7 percent expect increased employment in their respective businesses.

The OICCI is the collective voice of major foreign investors in Pakistan. The over 200 OICCI members, from 31 different countries, have a presence in 14 sectors of the economy and contribute around one-third of Pakistan’s total tax revenue, besides facilitating the transfer of technology and skills and providing employment to a sizeable number of people.

About a third of OICCI member companies are listed on the Pakistan Stock Exchange and 40 members are associates of the Global Fortune 500 companies.

Besides their business operations, the OICCI members realize their corporate social responsibilities and are major contributors to various CSR activities benefitting 34 million persons from underprivileged communities.

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