The largest drop was recorded in the “Manufacturing sector” (22%), followed by “Retail & Wholesale trade” (21%), and “Services sector” (18%). The survey sample consisted of 42 percent respondents from Manufacturing sector, 35% from the Services sector and 23% from the retail/ wholesale trade. Overall, the Manufacturing sector recorded a net confidence level of negative 19%, whereas services and retail sector stood at negative of 26% and 35% respectively.
The three major threats to business growth identified in the survey are super high Inflation, by 82% respondents, High Taxation (74%), and Pak Rupee Devaluation (72%) which could potentially slow down business growth in Pakistan, which remained consistent to feedback from the last wave of BCS.
Amir Paracha, President OICCI observed, “The significant drop in the overall Business Confidence was not a surprise considering the volatile and extremely challenging economic situation during the past year. The acute FX shortage throughout this period has affected import and operations of many businesses, with hyperinflation, very high interest rates, and rapid devaluation of the currency negatively impacting the business environment.”
The OICCI BCI Survey is conducted periodically, across nine cities, covering 80 percent of the GDP, with higher weightage given to key business centres of Karachi, Lahore, Rawalpindi-Islamabad, and Faisalabad. The OICCI Survey feedback covers business environment at regional, national, sectorial, and own business entity levels in the past six months, as well as the anticipated business and investment environment in the next six months.
Overall, three-fourth (75% vs 56% in previous wave) survey respondents were negative on the business environment in the past six months and going forward 23% (vs only 2% in the previous survey) were negative for the next six months. The survey respondents expressed a gloomy business outlook for the next 6 months.
The sentiments of the OICCI members, the leading foreign investors, who were also randomly included in the survey, stand at negative 19%, which is substantially lower, compared to the positive 6% in the previous wave. However, OICCI members’ business confidence stands is still lower than non-members and that has been a trend for a long period.
M. Abdul Aleem, CEO OICCI, observed that “Foreign investors feedback highlights their concern due to extreme restrictions on LCs for business operations, extreme delays in overseas remittances for goods, services and dividends, besides fast diminishing return on their investment in Pakistan.”
Going forward, one-fourth of the respondents indicated new capital investment plans, expansion in business operations and employment, at a level significantly lower than wave 22. The plan for new investment declined to negative 26%, followed by plan to increase employment to negative 11% and expansion in business to negative 8%.