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November 25, 2020

Consumer morale up in Q3 on post-lockdown hopes

Business

November 25, 2020

KARACHI: Consumer confidence in Pakistan improved in the third quarter of 2020, largely on account of optimistic future expectations amid complete withdrawal of lockdown and resumption of normal business activities, findings of a survey issued on Tuesday said.

Dun & Bradstreet Pakistan and Gallup Pakistan issued their third report on Pakistan Consumer Confidence Index (CCI), developed by assessing consumers’ confidence about the economy as well as their personal financial situation.

The index covers four key parameters i.e., Household Financial Situation, Country’s Economic Condition, Unemployment, and Household Savings. It is a reflection of ‘Current Situation’ (economic changes felt in the last six months), as well as ‘Future Expectations’ (changes expected for next 6 months) of consumers across the country.

The CCI ranges from 0 to 200, with 100 as the neutral value. A score of less than 100 indicates pessimism. The CCI was 88.7 points in Q3 2020, compared to 79.1 points in Q2 2020, translating into 12.1 percent Q-o-Q increase. However, the overall consumer confidence in Pakistan has remained pessimistic in all three quarters of 2020.

Nauman Lakhani, Country Lead of Dun & Bradstreet in Pakistan, in a statement said, “The third issue of the report compares changes in consumer confidence from Q1 2020 (pre-COVID times), Q2 2020 (during smart lockdown) and Q3 2020 (complete lifting of lockdown)”.

“Current consumer confidence growth of 7 percent as compared to the last quarter is healthy; showing signs of recovery in Pakistan. I envision this Index to become a barometer of economic well-being in the Country in the years to come.”

“We hope this report is useful to government entities, as well as private organizations to strengthen their understanding of consumers sentiments across Pakistan and help in developing effective strategies to deal with the on-ground situation,” Lakhani added.

Bilal Ijaz Gilani, Executive Director Gallup Pakistan, said, “Consumer confidence in Pakistan has shown upward trajectory for a third quarter in a row, which shows the impact of COVID-19 on economy and consumers is slowly tapering off”.

“Gallup Pakistan foresees two main threats to this recovery trend: unemployment and inflation. If both are not effectively tackled, many of the recent wins may be lost. Now is the time for fiscal and monetary policy instruments for public welfare.”

Gillani said perceptions about the country’s economy had improved consistently across all three quarters of 2020, highlighting upbeat consumer sentiments mainly on account of optimistic Future Expectations.

According to the report, perception about Household Financial Situation entered into green implying people’s household income seems to be rising after a decline due to COVID-19, while in Q3, Household Financial Situation was the only CCI parameter to turn overall optimistic owing to improvement in Future Expectations.

It said 30 percent consumers believed that their income levels would improve in the next six months in Q3 compared to 28 percent in Q2 and 32 percent in Q1. In contrast, rising Inflation and more importantly unemployment continued to drag consumers’ enthusiasm, the report said, adding that in Q3 survey, 91 percent consumers believed that daily essentials had continued to become expensive/very expensive in the last six months compared to 83 percent in Q2.

Moreover, four out five (77 percent) respondents believed that unemployment had increased in the last six months as compared to 80 percent in Q2 and 71 percent in Q1.

Consequently, two out of 3 (66 percent) respondents cited a decline in Household Savings over the last six months compared to 64 percent in Q2 and 57 percent in Q1.

On the whole, consumers across all provinces, location (Urban and Rural), different age groups and genders were relatively more optimistic for future economic situation, than they were during Q2 2020 survey, the report said.