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CCI registers 1.8pc QoQ increase

KARACHI: Dun & Bradstreet Pakistan and Gallup Pakistan have issued their report on ‘Pakistan Consumer...
Updated 24 Feb 2021

KARACHI: Dun & Bradstreet Pakistan and Gallup Pakistan have issued their report on ‘Pakistan Consumer Confidence Index (CCI)’ for Q4 2020.

The Consumer Confidence Index stood at 90.3 points in Q4 2020, compared to 88.7 points in Q3 2020, translating into 1.8% quarter-on-quarter increase. This was driven by the improvement in current situation, up 14.9% q-o-q, which was magnified by a recovery from a low base as sentiments were severely dampened during the past 6 months due to COVID-19.

In contrast, future expectations deteriorated for the first time since Q1 2020 due to cautious optimism by individuals because of prevailing uncertainty amid resurgence in COVID-19 cases. Moreover, the overall consumer confidence in Pakistan has remained pessimistic in all four quarters of 2020.

The CCI 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 ‘current situation’ (economic changes felt in the last six months), as well as ‘future expectations’ (changes expected for next 6 months) of consumers across the country. The CCI ranges from 0 to 200, with 100 as the neutral value. A score of less than 100 indicates pessimism.

During this survey, optimism has improved for household financial situation, country’s economic situation and unemployment, while it has declined for household savings.

This is primarily attributed to consumers’ concerns about future household savings. This could have a cascading effect on asset related investments in the country, and overall spending by consumers. Perceptions about the country’s economy have improved consistently across all four quarters of 2020, highlighting upbeat consumer sentiments. Household financial situation was the most optimistic parameter, implying people’s household income seems to be rising after a decline due to COVID-19.

During Q4, household financial situation was the only CCI parameter to turn overall optimistic owing to improvement in current situation. While 33% consumers believe that their income levels will improve in the next 6 months in Q4 compared to 30% in Q3, 28% in Q2 and 32% in Q1.

In contrast, rising inflation and more importantly unemployment continue to drag consumers’ enthusiasm as unemployment remained the most pessimistic parameter. Despite an increase in overall optimism regarding unemployment, 3 out of 4 (73%) respondents believed that unemployment has increased in the last six months as compared to 77% in Q3.

During Q4 survey, 93% consumers believed that daily essentials have continued to become expensive/very expensive in the last 6 months compared to 91% in Q3.

On the whole, consumers across all provinces, location (urban and rural) and different age groups were relatively more optimistic for current economic situation than they were during Q3 2020 survey.

Nauman Lakhani, country lead of Dun & Bradstreet in Pakistan, stated, “The fourth issue of Pakistan Consumer Confidence marks the end of the calendar year 2020. The report compares changes in Consumer Confidence from Q3 2020 to Q4 2020. Current Consumer Confidence growth of almost 15% as compared to the last quarter is healthy, showing signs of recovery in Pakistan but consumers were cautiously optimistic as Future Expectations have declined by 6.0% as compared to Q3. I envision this Index to become a barometer of economic well-being in the Country in the years to come.”

Bilal Ijaz Gilani, executive director of Gallup Pakistan, added, “At the end of 2020, Pakistani Consumer, whose pulse we measure in this CCI series, is cautiously optimistic about the future. The main drain on the household economy is the continually felt heat of inflation and concerns about rising unemployment. We at Gallup believe that real challenge is not to revive the economy to pre-Covid times -- we seem to be quite close to that already. Challenge is, rather, to resuscitate the economy to a galloping pace -– verdict is still out if the current upward trajectory is going to meet this ambitious goal.”

Copyright Business Recorder, 2021