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As euphoria cools, business confidence takes a plunge

KARACHI: Business confidence dipped by 19 percentage points to 17 per cent, according to the findings of a latest survey conducted by the Overseas Investors Chamber of Commerce and Industry (OICCI).

The decline was observed across all segments of trade and industry.

The countrywide Business Confidence Index survey was conducted during the September-October period. In the previous survey whose results were released in April, the overall business confidence score stood at 36pc.

The respondents indentified concern on energy, increase in prices, security, law and order, government policies, regulations, decline in exports, negative impact of new tax laws and volatile political environment as some of the key issues.

“The latest survey results, despite being significantly positive against two years ago, represented a significant correction,” OICCI President Shahab Rizvi commented. “This should be taken as a key watch-out for the government.”

He said that part of this correction could be natural rebalancing of feelings with the euphoria of initial positivity cooling down.

However, another part of this correction was driven by perceived and real concerns on taxation, inconsistency of policies, and management of security and energy issues.

The score of the manufacturing sector went down by 12 percentage points, retail sector by 21 and that of the service sector by a massive 28 points.

The sentiments of leading foreign investors, represented by the OICCI members, dropped by nine percentage points to 46pc.

The OICCI has 195 members operating in 35 different countries and belonging to 14 sectors of the economy.

Sector-wise results show that automobile 42pc, financial services 37pc, food 25pc and chemical 25pc were the most flourishing sectors, followed by transport and communication 23pc, petroleum 22pc, non-metallic 20pc, and retail and wholesale 17pc sectors.

However, tobacco -22pc, real estate -8pc and textile -8pc came out as the most conservative sectors in the latest survey.

Cities with positive outlook were Karachi 18pc, Lahore 29pc, Rawalpindi/Islamabad 22pc and Sialkot 12pc.

In contrast, confidence level dec­lined in Quetta -14pc, Faisalabad -1pc, Multan -4pc and Peshawar -8pc.

The business confidence for the next six months is expected to be positive but considerably less bullish than the April 2016 survey.

Businesses are expecting to increase their employment in the next six months, but somewhat in lesser proportion compared to the last six months.

On the positive side, many of the survey respondents were optimistic in terms of increasing demand due to expected economic growth and ongoing major infrastructure and projects related to the China-Pakistan Economic Corridor.

Courtesy : Dawn News



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