Overall Business Confidence Has Declined in Pakistan: SBP Report

The overall business confidence in June 2019 has dropped to 43 from 46 in April 2019, according to the latest report of State Bank of Pakistan (SBP) on Business Confidence Survey (BCS).

It shows the depressive views of the business community about the economy have further increased, resulting in the lowest level of Business Confidence Index (BCI) since its inception in October 2017.

The Business Confidence Survey was conducted in June 2019; with 451 firms surveyed.

SBP has been conducting the Business Confidence Survey (BCS) in collaboration with Institute of Business Administration (IBA) since October 2017 at a bi-monthly frequency to obtain the views of senior managers of large companies in the industry and services sector.

The report stated that the index of perception remained in the negative zone for both industry and services. In case of industry, the index has decreased from 45 in April 2019 to 41 in June 2019; while that for services decreased from 47 to 44 during the same period.

The perceptions of respondents regarding both current and expected economic and business conditions have worsened between the last two waves, stated the report.

Current Business Confidence

About the Current Business Confidence, the report says CBCI has declined from 40 in April 2019 to 36 in the current wave. It is worth noting that it has remained in the negative zone for the last six waves including the current wave.

The main driving factor for a considerable decrease in CBCI is negative views of survey respondents regarding the general economic conditions in the country over the last six months. There is also a significant decline in the perception of respondents regarding production and employment over the last six months.

Expected Business Confidence

Turning to ‘Expected Business Confidence’, the report shows a decrease, though the index is still in the positive zone.

The value of EBCI declined from 51 in April 2019 to 46 in the current wave. Although the EBCI for services decreased from 53 to 52 during the same period, it remained in the positive zone.

Employment

The Current Employment diffusion index has slipped further into the negative zone from 48 in April 2019 to 47 in the current wave.

The overall outlook for expected employment, however, has remained constant between the two waves. The breakdown of expected employment by economic activity shows interesting results; the firms in the industry sector are expecting to decrease their employment in the next six months, while the services sector firms are expecting to hire more employees in the next six months



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