Business confidence on the rise as per Overseas Chamber of Commerce survey

ISLAMABAD: The Overseas Investors Chamber of Commerce and Industry (OICCI) has released its latest Business Confidence Index (BCI) Survey – Wave 24, unveiling a promising upswing in Pakistan’s business confidence. Spanning from October to November 2023, the survey shows a seven percent overall improvement compared to the previous wave in March to April 2023.

The report indicates a positive shift in business sentiments, with Pakistan’s overall business confidence standing at negative 18 percent, an improvement from the negative 25 percent recorded earlier. The manufacturing sector witnessed the largest increase, rising by 9%, reaching -10% from -19%, followed by the services sector at -18% (compared to -26%). Although the retail and wholesale sector remains the least confident, it has shown improvement of four percentage points compared to the last survey.

Despite the positive momentum, over three-quarters of the respondents expressed concerns about potential adverse effects on their businesses due to the current economic situation. Rising inflation, high taxation, and PKR devaluation topped the list of identified threats, consistent with the previous wave.

Amir Paracha, President of OICCI, attributed the improved business confidence to “relatively stable macroeconomic indicators, favorable changes in the political and economic landscape, supported by stability in FX rates and a record performance at Pakistan Stock Exchange.” Key contributors to this positive trend include capital investment and the six-month business outlook.

The comprehensive survey covers nine cities and gathers feedback from frontline business stakeholders, representing almost 80 % of the GDP. In Wave 24, 43 % of respondents were from the manufacturing sector, 34 % from services, and 23 % from retail/wholesale trade.

Looking ahead, 41 % of surveyed respondents had a negative outlook on Pakistan’s business situation in the next six months (nine % less than Wave 23), while 36 % expressed optimism. Notably, the BCI for randomly selected OICCI members, representing foreign investors, stood at a positive three percent, a significant improvement from the negative 19 percent in the previous wave, surpassing the confidence of non-members.

Wave 24 explores the future business outlook, revealing that while new orders remain in negative territory, the confidence index for expansion plans improved by two percent. Expectations for a decrease in employment opportunities improved by two percent, reflecting a more positive business environment. Capital investment plans showed a significant improvement of 22 percent, contributing to the overall positive trend in business confidence.