The reopening of businesses across the country after the coronavirus lockdown coupled with improvements in work climate pushed up the Business Optimism Index (BOI) for Pakistan from 112.8 points in the second quarter (April to June) of 2020 to 146.5 points in the third quarter (July-September).
According to Dun & Bradstreet’s ‘Business Optimism Index’ report, business sentiment among local firms in Q3 2020 rebounded to pre-COVID-19 levels, mainly on account of resumption in economic activity amid gradual reopening of the economy.
All indices remained in an optimistic range during the period under review (between 141.1 and 149.4 points) and depicted a strong growth barring the Exporter Optimism Index which remained relatively flat.
The SME Optimism Index reached 142.2 points while the Large Companies Optimism Index rebounded to a Q4 2019 level of 149.4 points. Businesses across all sectors showed an optimistic trend during the third quarter. The services sector experienced the highest increase of 52.8 points on a quarter over quarter (QoQ) basis and reached 146.5 points. Moreover, the trading and manufacturing sectors’ BOIs improved by 26.4 points and 19.2 points QoQ respectively.
A greater number of participants felt their sales revenues, selling prices, sales volumes, employment size and profits would increase in the near future. As many as 72 percent of the respondents expected an increase in sales volume due to higher demand. 35 percent of businesses expected price stability while 45 percent predicted an increase in selling price due to the devaluation of PKR and to cover up the losses incurred during the lockdown.
The manufacturing, trading, and services sectors are expected to remain optimistic for the fourth quarter of 2020 while the trading sector, driven by the resumption of business activities and gradual lifting of lockdowns, is expected to remain most optimistic.
Dun & Bradstreet latest report about Pakistan "The overall outlook is upgraded to 'stable' amid an improving economic recovery, while the political environment outlook is also 'stable' despite co-ordinated opposition to the government." #PakistanMovingForward
— Asad Umar (@Asad_Umar) November 8, 2020
The net balance for forecast business situation (Q4 2020) highlighted optimism. Net balance increased to 67 percent as compared to 7 percent for the business situation in the current quarter, indicating significantly higher optimism in the coming months.
Business disruptions due to COVID-19 and exchange rate fluctuations which hindered growth in the third quarter of 2020 continue to pose the biggest challenge.
Owing to COVID-19, the SME sector faced difficult times. This was reflected by the SME Optimism Index, increasing 35.1 points QoQ to 142.2 points. The SME Optimism Index is lower compared to the Large Companies Optimism Index for all parameters due to lower business optimism, especially in the manufacturing sector.
The Exporters Optimism Index was calculated at 141.1 points for Q3 2020, down by 0.4 points QoQ. Exporters indicated a weaker forecast than domestic-market oriented firms across all parameters.
Thank you PMIK @ImranKhanPTI
The Business Optimism Index (BOI) for Pakistan increased from 112.8 points in the second quarter (Apr-June) of 2020 to 146.5 points in the third quarter (July-Sept).
According to Dun & Bradstreet’s ‘Business Optimism Index.
— Javed Afridi (@JAfridi10) November 8, 2020
As the second wave of COVID-19 is spreading across the world, it is imperative for Pakistanis to observe the possible preventive measures throughout the winter season to minimize the impact of coronavirus.
Closure of businesses in the case of a second lockdown is expected to negatively impact the economic gains again which will be unfavorable for the business climate of the country resulting in layoffs and poverty.
Provincial governments came with strict measures of penalizing people who were avoiding standard operating procedures (SOPs) set for COVID-19. Measures like smart lockdowns are indispensable to stem the rising cases of COVID-19.