In the past six months, a number of reasons including political and economic uncertainty have contributed to a fall in business confidence across the country in addition to growing prices and currency depreciation.
The Business Confidence Index (BCI) Survey (Wave-22) report was made public by the Overseas Investors’ Chamber of Commerce and Industry (OICCI). OICCI periodically performed this poll in nine cities with GDPs of 80 percent including the commercial hubs of Karachi, Lahore, Rawalpindi, Islamabad and Faisalabad.
The overall Business Confidence Score (BCS) has declined by 21 percentage points to minus four percent, according to the survey carried out in September and October this year, compared to 17 percent during the survey carried out in March and April last year.
Ghias Khan, president OICCI has said that the four percent decrease in business confidence was unfortunate but not unexpected given the unstable political and economic scenario during the previous six months.
In addition, growing inflation, rising petroleum product costs and the gradual depreciation of the rupee have all had a negative impact on the nation’s economic activities. He said that the pace of business had been slowed down by floods in Sindh and other provinces as a result of August’s record rainfall.
The service sector experienced the greatest decline in business confidence (by 24 percentage points) followed by wholesale trade (by 22 percentage points), the manufacturing sector in which 42 percent of respondents responded, in the service sector 33 percent and in the retail and wholesale trade 25 percent.
The manufacturing sector achieved three percent positive points despite a clear 20 percent decrease in business confidence while the service, retail and wholesale sectors reported minus eight percent and minus 14 percent points respectively.
In addition to the business and investment climate during the previous six months OICCI survey also examined the business environment at the national, regional and sectorial levels. In business climate poll 56 percent of respondents indicated that the last six months had been negative up from 19 percent in the previous study.
In addition only two percent of respondents to a study on the business environment for the following six months were positive down from 18 percent in the prior survey. The confidence of OICCI members was positive six percent which is a positive 33 percent decrease from the poll performed the previous year.
Foreign investors participated in this study, and they have historically displayed strong business confidence. The poll highlighted three key dangers to corporate growth. Inflation by 78 percent, tax increases by 71 percent and rupee depreciation by 70 percent.
In addition 18 percent of respondents anticipated business operations to grow, up from 34 percent in the previous year’s survey and 21 percent in this year while seven percent anticipated more job opportunities in their respective businesses than they did six months ago. It represented 16 percent of the total.
