ISLAMABAD: The Overseas Investors Chamber of Commerce and Industry (OICCI) has unveiled its latest Business Confidence Index (BCI) Survey – Wave 23, revealing a significant slump in overall business confidence in Pakistan.
Conducted from March to April 2023, the comprehensive survey paints a gloomy picture for the country’s economic outlook, with business confidence plummeting to a negative 25 percent (-25%). This represents a staggering 21 percent drop compared to the previous Wave 22 Survey conducted from September to October 2022.
The manufacturing sector took the hardest hit, recording a sharp decline of 22 percent, followed closely by the retail and wholesale trade sector, which experienced a 21 percent decline. The services sector also faced a notable setback, with an 18 percent drop in confidence. The survey sample comprised 42 percent respondents from the manufacturing sector, 35 percent from services, and 23 percent from retail and wholesale trade. As a result, the manufacturing sector’s net confidence level stood at a discouraging negative 19 percent, while the services and retail sectors fared worse with negative ratings of 26 percent and 35 percent, respectively.
Highlighting the major concerns hindering business growth, the survey found that a staggering 82 percent of respondents identified super high inflation as a major threat. This was closely followed by high taxation (74 percent) and Pak Rupee devaluation (72 percent). These factors, if left unaddressed, have the potential to impede business growth in Pakistan. It is worth noting that these concerns have remained consistent since the last wave of the Business Confidence Survey.
The OICCI BCI Survey, which encompasses nine major cities covering 80 percent of the GDP, places significant emphasis on key business centers such as Karachi, Lahore, Rawalpindi-Islamabad, and Faisalabad. The survey evaluates the regional, national, sectoral, and individual business entity levels over the past six months while also gauging anticipated business and investment conditions for the next six months.
Alarming figures emerged from the survey, as 75 percent of respondents expressed a negative outlook on the business environment in the past six months, a sharp increase from 56 percent in the previous wave. Furthermore, the survey revealed a bleak sentiment for the next six months, with 23 percent of respondents anticipating a further decline in business prospects, in stark contrast to the mere 2 percent recorded in the previous survey. The prevailing sentiment appears to be one of caution and skepticism among respondents regarding future business prospects.
While the sentiments of OICCI members, representing leading foreign investors, were included in the survey, their confidence levels stood at a disheartening negative 19 percent. This figure marks a substantial decline from the modest positive 6 percent recorded in the previous wave. Notably, OICCI members consistently exhibit lower business confidence levels compared to non-members—a long-standing trend that persists in the current survey.
Commenting on the survey results, Amir Paracha, President of OICCI, acknowledged that the decline in business confidence came as no surprise given the tumultuous economic landscape and the myriad challenges faced in the past year. The acute foreign exchange shortage severely impacted import operations, contributing to hyperinflation, high interest rates, and rapid currency devaluation, which have all negatively influenced the overall business environment.
