KARACHI: Overseas Investors Chamber of Commerce and Industry (OICCI) shared the results of its Business Confidence Index (BCI) Survey – Wave 17, which shows that the overall Business Confidence in Pakistan stands at 12 per cent negative, a 26 per cent decline from the 14 per cent positive recorded in the Wave 16 results announced in May last year.
The Wave 17 survey was carried out in December 2018.
The survey results were largely influenced by the downward trend in the services sector and partially in the retail and wholesale trade sector. The Business Confidence Score (BCS) of services sector which represents about 30 per cent of the respondents was 29 per cent negative compared to 23 per cent positive in the previous Wave 16. The BCS of retail and wholesale trade, representing 30 per cent respondents, declined to 5 per cent negative compared to 6 per cent positive in the Wave 16. The BCS of the manufacturing sector, which represents over 40 per cent of the survey respondents, at 4 per cent negative, was 19 per cent worse than the Wave 16.
Commenting on the BCI results, Irfan Wahab Khan, President OICCI said: “The negative business confidence in Wave 17 was largely anticipated. The rapid change in the economic landscape throughout 2018 with severe pressure on the Balance of Payment and the exchange rate, with significant Pak Rupee devaluation together with Interest rates raised to 10 per cent by State Bank of Pakistan in November and resultant accelerated level of inflation, dampened the business confidence.”
OICCI President added: “the positive business-friendly measures announced by the Government in the Supplementary Finance Bill is very timely and provides some clarity towards the policy direction of the government.” OICCI President further mentioned that” measures recently announced are expected to re-engage and energize the business community towards accelerated economic and investment activity. There is expectations that the government will work with key stakeholders in the process of developing a robust economic recovery plan, outline the export growth strategy, leverage technology and good governance framework to deliver on the vision for economic growth in the near to medium term.”
OICCI BCI survey, conducted every six months, is a comprehensive review of the perception of business leadership in Pakistan covering business environment at regional, national, sectorial and own business entity level. The assessment takes into account the business environment in the past six months, as well as seeking respondents’ feedback on the anticipated business and investment environment in the next six months. The BCI feedback is indicative of the direction in which the economy is moving based on the perceptions of key stakeholders of the business community across the country and representing about 80 per cent of the GDP.
Based on respondents feedback in the December 2018 BCI survey, the major factors causing the decline in Business confidence was the significantly negative perceptions of Global, Country and Industry business situation during the past six months. This together with muted expectations of the business environment over the next six months with lower forecast for capital investment, profitability and return on investment also affected the overall Business Confidence for Wave 17.
The sentiments of the leading foreign investors, represented by the OICCI members, who were part of the survey, also recorded a sharp decrease of 27 per cent, to go down to 11 per cent from 38 per cent in the Wave 16 results.
The BCS in Metros has declined significantly from positive 14 per cent in Wave 16 to negative 20 per cent in Wave 17. Business community operating from Karachi had negative BCS in Wave 16, which further declined in Wave 17. In respect of Lahore and Rawalpindi/Islamabad BCS has turned from positive in wave 16 to negative in the latest survey. The score for Non-Metros declined marginally by 2 per cent