Lockdown turns business sentiments pessimistic in Pakistan

KARACHI: American data firm Dun and Bradstreet has found business sentiments in Pakistan turn pessimistic from optimistic thanks to two-month long lockdown imposed in the wake of the coronavirus infection outbreak.

Dun and Bradstreet’s Business Optimism Index (BOI) for the first quarter of 2020 on Monday showed that the enforcement of lockdown in the third week of March intensified the deterioration in the business sentiments and sped up the shift from optimism to pessimism.

The firm found that the businesses were optimistic and hopeful that the pandemic would not affect Pakistan very acutely, before the implementation of the lockdown.

Only a marginal drop of 2.4 percent was witnessed in the pre-lockdown Q1 2020 BOI when compared with the Q4 2019 BOI. However, Q1 2020 BOI, after enforcement of the lockdown, dropped from a high of 141.1 points – the index level prior to the lockdown – to 85.6 points, below the benchmark neutral value of 100 points and indicating a significant shift in the business sentiments from optimism to pessimism.

The BOI survey was conducted during Q1 2020 with companies spanning all across Pakistan. The companies included a mix of small, medium and large enterprises with representation from the manufacturing, trading, and services sectors in proportion to their respective value-added contribution to GDP.

Dun and Bradstreet launched its world-renowned BOI for Pakistan in Q4 2019 and aimed to measure the pulse of the business community and provide an outlook of business sentiments in the country.

D&B is helping Pakistani businesses in identifying and evaluating alternate business partners, vendors and customers so they can minimise the impact of current situation by establishing new relationships where their existing suppliers and customers are no more able to do business with them. It gets in touch with more Pakistani businesses and help them explore new avenues for business amid the lockdown and its impacts

The BOI for Q1 2020 represents mixed sentiments that were collected both before and after the announcement of the lockdown. Since the majority of responses were captured the lockdown restrictions, the Q1 2020 BOI issue primarily - at an aggregate level - reflects a pre-Covid-19 sentiment analysis.

The survey focused on five key parameters for businesses: sales revenue, selling price, volumes sold, number of employees, and profits.

At an overall level, businesses were optimistic for all the parameters for the Q2 2020. However, post-lockdown, there was a significant shift in business sentiments. Prior to the lockdown, 68 percent respondents anticipated an increase in sales revenue and 62 percent respondents anticipated increase in profits. However, post-lockdown, only 19 per cent respondents anticipated an increase in sales revenue and net profits. Additionally, prior to the lockdown, only three percent respondents anticipated decline in the number of employees. However, post-lockdown, the number increased sharply to 16 percent.