There’s improvement in overall business confidence: OICCI

KARACHI: Better economic growth, improvement in exchange rate and decline in inflation have contributed to the improvement in the overall business confidence in Pakistan.

The Overseas Investors Chamber of Commerce and Industry (OICCI) has unveiled the results of its Business Confidence Index (BCI) Survey-Wave 26, reflects some improvement in overall business confidence, which improved significantly by 9 percent.

Overall Pakistan’s Business Confidence stood at negative 5 percent in Oct-Nov 2024 improved from a negative 14 percent in Mar-Apr 2024.

According to survey the improvement in business sentiment is driven by positive economic growth, a stable exchange rate, and a notable decline in reported inflation. The Services Sector led the recovery, improving from negative 14 percent to positive 2 percent, followed by the Manufacturing Sector, which rose from negative 15 percent to negative 3 percent. Conversely, the Retail/Wholesale Sector registered a decline, dropping from negative 15 percent to negative 18 percent.

The survey highlighted optimism for the next six months, with 43 percent of respondents expressing positive expectations, up from 34 percent in the previous wave. Key contributors to this positive outlook include growth in the global market, better government policies, declining inflation, improved law-and-order conditions, and economic growth.

Commenting on the survey findings, Yousaf Hussain, President OICCI said that the improvement in the Business Confidence Index reflects an overall improvement in the economic outlook and the resilience of Pakistan’s business environment amidst ongoing challenges.

He said that the government has taken bold confidence building measures in compliance with IMF’s EFF programme translating into improved country risk rating by international rating agencies, and a boost in FX reserves of the country which helped maintain a stable exchange rate, containing inflationary increase to record lows, all of which collectively led to a positive business environment.

However, the OICCI president mentioned that the challenges of increasing cost especially of energy, high taxation and policy inconsistency need to be proactively managed through deeper engagement of policymakers with the industry. It would certainly enable the country to further improve business confidence, attract local and foreign investment, and ultimately boost job creation in the country, he added.

M Abdul Aleem, Secretary General OICCI, said that the BCI Wave 26 feedback reflect cautious optimism among businesses, with significant gains in the services and manufacturing sectors.

Despite notable improvement on the overall BCI, the new investment plans, overall, were negative 23 percent vs negative 12 percent in the previous BCI 25, which is an area of concern and need to be addressed to boost economic growth and employment, he mentioned.

Despite the positive trend, 66 percent of respondents reported a negative outlook on business conditions over the past six months, though this figure marked an improvement from 76 percent in Wave 25. Challenges such as high inflation, political instability, rising fuel prices, and ineffective trade policies remain critical concerns.

The BCI of foreign investors, OICCI members, randomly participating in the survey BCI 26 showed a healthy increase to positive 6 percent from negative 4 percent in BCI 25, mainly due to improved global business situation and improved industry environment in Pakistan in the past six months.

Copyright Business Recorder, 2024