KARACHI: The key findings of the Pakistan Consumer Confidence Index indicated that consumer confidence improved in the third quarter 2020 on account of optimistic future expectations amidst complete lifting of lockdown and returning of normalcy to trade activities.
Dun and Bradstreet Pakistan and Gallup Pakistan have issued their third report on "Pakistan Consumer Confidence Index (CCI)" for the third quarter of 2020. The report has been developed by assessing consumers' confidence about the economy as well as their personal financial situation.
The Index covers four key parameters: household financial situation, country's economic condition, unemployment, and household savings. The Index is a reflection of the "current situation" (economic changes felt in the last six months) as well as "future expectations" (changes expected for the next 6 months) of consumers across the country.
The index ranges from 0 to 200, with 100 as the neutral value. A score of less than 100 indicates pessimism. The consumer confidence index was 88.7 points in Q3 2020, compared to 79.1 points in the second quarter of 2020, translating into 12.1 percent on quarter-on-quarter basis increase.
However, the overall consumer confidence in Pakistan has remained pessimistic in all the three quarters of 2020. This was driven by optimistic future expectations in the third quarter, up 15.3 percent on QoQ, amidst complete lifting of the lockdown and normalcy in trade activities.
Nauman Lakhani, Country Lead of Dun and Bradstreet in Pakistan, stated, "The third issue of Pakistan Consumer Confidence report compares changes in consumer confidence from first quarter 2020 (pre-COVID times), second quarter 2020 (during smart lockdown) and third quarter 2020 (complete lifting of lockdown). Current consumer confidence growth of 7 percent as compared to the last quarter is healthy, showing signs of recovery in Pakistan.
I envision this Index to become a barometer of economic well-being in the country in the years to come. We hope this report is useful to government entities, as well as private organizations to strengthen their understanding of consumers' sentiments across Pakistan and help in developing effective strategies to deal with the on-ground situation."
Bilal Ijaz Gilani, Executive Director of Gallup Pakistan, while commenting on the findings of the report, said, "Consumer confidence in Pakistan has shown upward trajectory for a third quarter in a row which shows that impact of COVID-19 on economy and consumers is slowly tapering off. Gallup Pakistan foresees two main threats to this recovery trend: unemployment and inflation. If both are not effectively tackled, many of the recent wins may be lost. Now is the time for fiscal and monetary policy instruments for public welfare."
Perceptions about the country's economy have improved consistently across all the three quarters of 2020, highlighting upbeat consumer sentiments mainly on account of optimistic future expectations. Perception about household financial situation entered into green implying people's household income seems to be rising after a decline due to COVID-19.
During Q3, household financial situation was the only CCI parameter to turn overall optimistic owing to improvement in future expectations. Thirty percent of consumers believe that their income levels will improve in the next six months in the third quarter compared to 28 percent in the second quarter and 32 percent in the first quarter.
In contrast, rising inflation and, more importantly, unemployment continues to drag consumers' enthusiasm. During third quarter survey, 91 percent of consumers believed that daily essentials have continued to become expensive/very expensive in the last 6 months compared to 83 percent in the second quarter while 4 out 5 (77 percent) respondents believed that unemployment has increased in the last six months as compared to 80 percent in the second quarter and 71 percent in the first quarter.
Consequently, 2 out of 3 (66 percent) respondents cited a decline in household savings over the last six months compared to 64 percent in the second quarter and 57 percent in the first quarter. On the whole, consumers across all provinces, location (urban and rural), different age groups and genders were relatively more optimistic for future economic situation than they were during the second quarter 2020 survey.
Copyright Business Recorder, 2020