KARACHI: Business confidence in Pakistan has improved by 4.0 per cent though it remains in the negative. This is reflected in Wave 25 of the Business Confidence Index (BCI) survey conducted by the Overseas Investors Chamber of Commerce and Industry (OICCI).
The survey was conducted across Pakistan during March-April 2024. President of OICCI Rehan Shaikh says that the OICCI Business Confidence Index has shown some positive signs of economic recovery, rising to negative 14 per cent in March-April 2024 from negative 18 per cent in the previous survey of October- November 2023.
“This upward trend,” according to Rehan, “albeit small, indicates a more optimistic business environment, supported by improving economic growth, a stable exchange rate, and declining inflation.”
Going forward, anticipation of rising inflation, high taxation and inconsistent government policies have been expressed as key threats to business growth by the survey respondents.
The OICCI BCI results reflect feedback from about 80 per cent of the GDP stakeholders and comprised 43 per cent participants from the manufacturing sector, 36 per cent from services, and 20 per cent from the retail/wholesale trade sectors. The sectoral breakdown reveals that compared to the last wave, confidence has declined substantially to negative 15 per cent among firms in the manufacturing sector, indicating significant challenges confronting this sector.
In contrast, the retail sector’s confidence has risen by 16 per cent from negative 31 per cent in the previous wave to negative 15 per cent in the current one, showing the highest improvement among all sectors. The services sector demonstrates signs of optimism, although overall confidence remains negative -- negative 14 per cent as compared to negative 18 per cent in the previous Wave 24.Per Secretary General of the OICCI M Abdul Aleem: “the main concern for the country highlighted in the Wave 25 BCI survey is the drop in the new investment index to negative 12 per cent compared with negative 4.0 per cent in the last wave, which is mainly attributed to ineffective commercial and trade policies and an unclear global security situation.”
“The BCI of OICCI members, randomly included in the survey was recorded at negative 4.0 per cent, showing a notable decline from positive 3.0 per cent in Wave 24. The global business situation over the past six months and expectations about the next six months are the main driving factors for this drop in foreign investors’ confidence. However, as seen in the past, the confidence of OICCI members still remains higher than that of non-members.”
Key factors raising concerns over the past six months include political instability (74 per cent), fuel prices (70 per cent), high inflation (69 per cent), and currency devaluation (65 per cent). On the positive side, declining inflation, stable exchange rate, better economic growth were recorded as favourable factors.The BCI survey respondents also foresee continued risk of political stability, rising fuel prices, and rebounding inflation in the future -- factors which have restrained their confidence and showed a marginal improvement.