Pakistan's consumers 7% more confident about economy, finances than mid-2020: survey

KARACHI: Pakistani consumers are at least 7% more confident about the overall economy and their personal finances than they were in mid-2020, a survey conducted by Dun & Bradstreet and Gallup Pakistan showed.

The consumer confidence survey, the results of which were released earlier today, was conducted during September 2020 and measured the level of optimism that consumers have about Pakistan's economic condition, their household financial situation, job prospects, and their personal finances.

It showed that the Consumer Confidence Index (CCI) recorded a 7% growth as compared to the last quarter, while future expectations bolstered to 15.3%. An improvement was also observed in the household financial situation where personal incomes seemed to be rising after a decline due to the coronavirus pandemic.

The survey saw slightly upbeat consumer sentiments about the economy in general but people were concerned about the rising inflation and more importantly, unemployment continued dragging consumers' enthusiasm.

Overall, the CCI grew 12.1% — 9.7 points — in the third quarter of 2020, owing to better future expectation as the government completely lifted the coronavirus lockdown and normalcy seemed to be returning in trade activities, the survey indicated.

It is important to note that the CCI was pessimistic in the ongoing year's first quarter, with the survey completed "before COVID-19 pandemic fully impacted Pakistan" — between February and March 2020. Then, between July and August 2020, the overall CCI remained flat as opposed to the preceding period, showing no significant improvement.

Pakistani consumers remained the most pessimistic about current unemployment situation, with the net indicator (NI) for the third quarter at 68.2 (scores between 0 to 99 indicate decreasing levels of pessimism). They did, however, show most optimism about future household financial situation, with the NI at 128.9 (scores between 101 to 200 indicate increasing levels of optimism).

While the overall status of the country's economic situation, unemployment, and household savings remained in the red zone (98.8, 68.2, and 82.6, respectively), only the household financial situation turned green at 105.3.

However, the current feeling about household savings fell consistently across the three quarters, dipping from 72.7 in first quarter and 59.9 in the second to 56.2 in the third one.

With regard to the future expectations, household financial situation, unemployment, and household savings were in the green zone (128.9, 120.6, and 108.9, respectively).

Across all indicators, unemployment — despite rising from the prior period — remained the most pessimistic at 68.2. Nevertheless, people seemed to be more confident about the future, with 50% and 45% of the respondents saying household financial situation and the country's economic condition, respectively, would improve in the future.

A source of worry, regardless, was that a whopping 77% of the people surveyed said unemployment had shot up in the last six months.

Similarly, 66% cited a decline in household savings over the last six months and less than a third (30%) were confident about their income levels rising over the next six months.

Another cause of concern highlighted by the survey was that 91% of consumers said that daily essentials have become expensive or very expensive in last six months.

In a post on Twitter, the PTI-led government of Pakistan said the higher CCI was "on account of optimistic future expectations accredited to Government’s effective strategy to combat pandemic without effecting economic activities".