Business Confidence Improves But Still Negative: OICCI Survey

Business Confidence Improves But Still Negative: OICCI Survey – Business confidence in Pakistan has seen a slight improvement, rising by 4 percent, though it remains in negative territory. This is according to the 25th Wave of the Business Confidence Index (BCI) survey conducted by the Overseas Investors Chamber of Commerce and Industry (OICCI). The survey was carried out across Pakistan during March-April 2024.

Rehan Shaikh, President of OICCI, stated, “The OICCI Business Confidence Index has shown some positive signs of economic recovery, rising to negative 14 percent in March-April 2024 from negative 18 percent in the previous survey of October-November 2023. This upward trend, albeit small, indicates a more optimistic business environment, supported by improving economic growth, a stable exchange rate, and declining inflation.”

Despite these gains, business leaders still express concerns about rising inflation, high taxation, and inconsistent government policies as key threats to business growth.

The OICCI Business Confidence Index results reflect feedback from about 80 percent of the GDP stakeholders and include 43 percent participation from the manufacturing sector, 36 percent from services, and 20 percent from retail/wholesale trade. The sectoral breakdown reveals significant challenges for the manufacturing sector, where confidence declined to negative 15 percent, highlighting substantial difficulties. In contrast, the retail sector’s confidence rose by 16 percent, improving from negative 31 percent to negative 15 percent, marking the highest improvement among the sectors. The services sector also showed signs of optimism, with confidence rising to negative 14 percent from negative 18 percent in the previous survey.

M. Abdul Aleem, Secretary General of OICCI, discussed the results, highlighting the main concern: a drop in the new investment index to negative 12 percent from negative 4 percent in the last survey. This decline is attributed to ineffective commercial and trade policies and an unclear global security situation. “The BCI of OICCI members, randomly included in the survey, was recorded at negative 4 percent, showing a notable decline from positive 3 percent in Wave 24. The global business situation over the past six months and expectations about the next six months are the main driving factors for this drop in foreign investors’ confidence. However, as seen in the past, the confidence of OICCI members still remains higher than that of non-members,” Aleem explained.

The survey identified key concerns over the past six months: political instability (74 percent), fuel prices (70 percent), high inflation (69 percent), and currency devaluation (65 percent). On the positive side, declining inflation, a stable exchange rate, and better economic growth were recorded as favorable factors, along with improvements in the company and industry business situation. However, respondents also foresee continued risks from political instability, rising fuel prices, and rebounding inflation in the future, which have restrained their confidence, resulting in only a marginal improvement.

The slight rise in business confidence, while encouraging, underscores the need for continued efforts to stabilize the economic environment and address the persistent challenges facing the business community in Pakistan.