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No marks for guessing how the businesses would have responded in April when asked about having any confidence in the situation, current or expected. The latest wave of the State Bank of Pakistan’s Business Confidence Survey shows the confidence has come down like never before.

Recall that the Overall Business Confidence had been struggling to make it to positive territory (in excess of 50) for much of 2019 and had only begun to look promising in the December wave. Then came the decade high inflation and February confidence went for a toss. It has historically been observed that the inflation expectations play a key role in expected business confidence.

Inflation expectations, though not part of this survey, have come down substantially as a result of the pandemic. The SBP has slashed the interest rates by over 500 basis points in two months, but none of that was enough to instill confidence in the businesses, as the index values went to lowest ever.

The uncertainty surrounding the pandemic could be gauged from the fact that the expected consumer confidence converged with the current consumer confidence for the first time ever. Single digit inflation, single digit interest rates, multibillion-dollar industrial package – nothing seems to be enough for businesses to be optimistic about future.

The Purchasing Managers Index, dipped very slightly, but the reading has been in the negative territory for over a year now, and is reflective of the rather subdued industrial activity in the period. The Expected Employment Index reads a scary tale, falling in the negative territory for the first time ever. The trend is more pronounced in the industrial sector, where the index value went down by 10 points, versus a 5-point decline in services sector expected employment.

All said, one must not overread the survey numbers, considering the uncertain and fluid nature of the situation. The lockdown has been considerably eased from the time this survey was conducted, which should offer some hope for business activities in the next wave. On the other hand, the outbreak is yet to peak in Pakistan, and should it turn ugly against the trend so far, another lockdown cannot entirely be ruled out. Confidence in such shaky times surely is too much to ask for.