Business confidence in Pakistan rises by seven percent, still in negative zone: OICCI

KARACHI: Business confidence in Pakistan has improved by seven percent in October-November, but remains in negative territory amid persistent economic challenges, a survey by a foreign investors’ chamber showed Tuesday.

The Business Confidence Index Survey (BCI) conducted by the Overseas Investors Chamber of Commerce and Industry (OICCI) indicated a positive shift from negative 25 percent in March-April to negative 18 percent in October-November.

The survey, which covered nine cities and represented almost 80 percent of the GDP, painted a nuanced picture of business sentiments, with the manufacturing sector showing the largest increase, followed by the services sector.

The retail and wholesale sector, though still least confident, also saw an improvement. The largest increase was recorded in the manufacturing sector at negative 10 percent (negative 19 percent previously), followed by the services sector at negative 18 percent (negative 26 percent previously).

The retail & wholesale sector though still least confident, has seen an improvement at negative 31 percent compared to negative 35 percent in the last survey. Despite the positive momentum, over three-quarters of respondents expressed concern that the current economic situation could adversely affect their businesses, the survey showed.

"The top three threats identified were rising inflation, high taxation and rupee devaluation – concerns consistent with the previous wave," the OICCI said in a statement. "Key parameters contributing to the positive trend include capital investment and the outlook for Pakistan's business situation in the next six months.”

The OICCI president Amir Paracha attributed the improvement in business confidence to "relatively stable macroeconomic indicators, favourable changes in the political and economic landscape which was also supported by some stability in the foreign current rates and a record performance at Pakistan Stock Exchange".

Surveyed respondents expressed their outlook with 41 percent having a negative perspective on Pakistan’s business situation in the next six month (nine percent less than teh previous servey). Looking ahead, 36 percent respondents were optimistic about the next six months.

Notably, the survey sample included 43 percent respondents from the manufacturing sector, 34 percent from the services sector, and 23 percent from the retail/wholesale trade.

The BCI of randomly selected OICCI members, representing foreign investors, stood at a positive three percent, a significant improvement from the negative 19 percent in the previous wave. The OICCI members' confidence surpasses that of non-members, which has been a trend for a long period.

M Abdul Aleem, OICCI secretary general said “while challenges persist, the overall trend indicates a resilient business community anticipating improvements in the coming months". "Foreign investors, as represented by OICCI members, have expressed hope that the authorities will soon take control of anomalies including undue price controls, streamline taxation regime, which collectively is reflected in a particularly positive outlook, contributing to the overall upward trajectory in business confidence,” he added.

Exploring the future business outlook in the survey, new orders remain in negative territory but the confidence index for expansion plans improved by two percent, indicating a decreased wariness among businesses.

Expectations for a decrease in employment opportunities improved by two percent, suggesting a more positive outlook for the business environment. Capital investment plans showed a significant improvement of 22 percent, contributing to the overall positive trend in business confidence.