KARACHI:
In the latest Gallup business survey conducted in the quarter ended March 2024, the business community foresees a deterioration in the future situation for their businesses, moving from an improved state at present to a worse one.
The pessimism among businessmen regarding the future direction of the country has further worsened, scoring at negative 66% in the quarter compared to negative 47% in the prior quarter ended December 2023.
The businesses’ opinion of the future has drastically changed towards negativity following the change of command at the centre. Decision-making power transferred to Prime Minister Shehbaz Sharif after he formed a coalition government at the centre in the aftermath of February 2024. This transition followed a 16-month coalition government that managed affairs more effectively, according to reports.
According to the latest survey results, “54% of businesses report worse Ramazan sales this year compared to the previous year; a quarter of businesses report paying bribes to government officials, and despite government claims to the contrary, close to half of businesses complain of load shedding. A third of businesses see the government as a major hurdle to their growth and do not view it as a facilitator.”
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However, the score for the “current business situation” on the Gallup Business Confidence Index has improved by seven percentage points to 6% in the latest quarter compared to negative 1% in the previous quarter, marking consecutive improvement for the fifth straight quarter.
Approximately 47% of businesses in the past quarter perceive themselves to be facing bad or worse conditions, showing a 3% decrease from last year.
“Over half of businesses selling garments, commodities, stationery, and gift items reported that their business is doing well. Sellers of electrical items, industrial machine parts, electronic appliances, and medical equipment are among the most pessimistic about their current business conditions.”
“While economic security has not fully stabilised due to the ongoing political situation, the business situation score has improved regardless,” the report stated.
When asked about their expectations for future business conditions, businessmen expressed pessimism as the net future business confidence score has worsened by 16% since the last quarter and now stands at 4%, according to the survey report.
The business community’s perception of the country’s direction is negative, with only 20% of respondents believing that Pakistan is heading in the right direction. The country’s direction score has fallen to -60%, down 13 percentage points compared to the previous quarter.
“There is an overall decline in the future business and direction of the country scores” between the third quarter of 2023 and the first quarter of this year, the report observed.
Like the previous survey, inflation was the most cited problem, with more than two out of four businesses wanting the new government to control it. The proportion of those wanting the government to address the devaluation of the rupee has also increased.
“Political instability and taxes have taken a backseat in concern relative to the past quarter, while utility bills and business-related legislation have become more of a concern,” the report noted.
Three out of ten businesses surveyed answered affirmatively when asked whether business conditions in the past three months led to a decrease in the workforce. This number shows a 6% decline from the previous quarter.
Given the persisting inflation and slow economic activity in the country, businesses were asked about their sales this Ramazan, and more than half of them reported a worsening situation. Only 18% said they were doing better.
Moreover, a majority, 73%, of the businesses surveyed do not have hope that the newly elected government of Prime Minister Shehbaz Sharif will address the country’s business problems. Only 25% of the businesses surveyed expressed some level of hope.
The survey reveals that while the majority of businesses, 74%, did not make such complaints, some service providers and manufacturers said they had to pay bribes in the past six months ending March to run their businesses.
About half of the businessmen, 45%, consider the government irrelevant to their business, while 23% view it as a facilitator and 33% consider it a hurdle, according to the survey report.
Despite the government’s claims of reduced load shedding, the number of businesses facing power outages has increased by 7% to 45% this quarter compared to the previous one.
“After many quarters, more businesses perceive that their current situation is better than before, which is positive news,” said Bilal Ijaz Gilani, Executive Director at Gallup Pakistan and Chief Architect of the Gallup Pakistan Business Confidence Index Pakistan, in the report.
He also mentioned that pessimism about the country’s economic future, as well as the direction of the country, has deteriorated.
“Lack of certainty about both politics as well as economic policies continues to hurt the business community’s sentiment despite some improvement on the ground,” Gilani added.
Published in The Express Tribune, April 6th, 2024.
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