Survey shows plummeting business optimism

Published May 12, 2020
Lockdown restrictions has intensified deterioration in business sentiments and sped up shift from optimism to pessimism. — AFP/File
Lockdown restrictions has intensified deterioration in business sentiments and sped up shift from optimism to pessimism. — AFP/File

LAHORE: The business optimism was already receding when the coronavirus pandemic struck the country, forcing government to shutter the economy to halt the spread of the infections.

The lockdown restrictions enforced at the end of the third week of March had only intensified the deterioration in the business sentiments and sped up the shift from optimism to pessimism, says a new report — Business Optimism Index (BoI) — for the first quarter of calendar 2020 by Dun & Bradstreet, an international company providing corporate analysis, insights, and analytics for businesses.

The company had released its first BOI report for Pakistan for the last quarter of 2019 to December. The report aims to measure the pulse of the business community and provide an outlook of business sentiments in Pakistan.

The initial findings BOI survey - before the government had executed the lockdown restrictions to shutter the economy - show businesses were “slightly less” optimistic about the future and yet were hopeful that the pandemic would not affect Pakistan very acutely. Thus, the index dropped only marginally by 2.4pc quarter-on-quarter. The respondents were more concerned about inflation and other macroeconomic pressures, as well as exchange rate rather than potential Covid-19 related uncertainty. Only 9pc reported the virus uncertainty as an emerging challenge for the businesses.

However, enforcement of the lockdown saw sentiment deteriorate rapidly as the index plummeted to 85.6 points - significantly below the benchmark neutral value of 100 points, indicating a significant shift in the business sentiments from optimism to pessimism.

Overall, the composite BOI for the first quarter of the present calendar year stood at 120.6 points or down by 16.6pc from a quarter ago.

The BOI survey was conducted with companies spanning the country. Respondent companies included a mix of SMEs and large enterprises representing the manufacturing, trading, and services sectors in proportion to their respective value-added contribution to the nation’s GDP.

Since the majority of responses were captured before the lockdown restrictions were notified, according to the report, the index - at an aggregate level - primarily reflects a pre Covid-19 sentiment analysis.

The report discusses five key parameters for businesses: sales revenue, selling price, volumes sold, number of employees, and profits. Overall, the respondent businesses were optimistic for all the parameters for the second quarter of CY2020, a sentiment that saw significant shift after implementation of the lockdown restrictions.

Published in Dawn, May 12th, 2020

Now you can follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Noon leaks
Updated 27 Sep, 2022

Noon leaks

PMO audio leaks are a national security emergency that ought to be investigated at the highest level.
Cipher probe offer
27 Sep, 2022

Cipher probe offer

CONSIDERING the toxic political polarisation in the country, former prime minister Imran Khan’s suggestion that ...
Delaying Doha plans
27 Sep, 2022

Delaying Doha plans

WHEN Doha announced its intention to spend $3bn in different commercial and investment sectors of Pakistan around a...
Debt deferment
Updated 26 Sep, 2022

Debt deferment

Pakistan’s dollar funding needs for next 5 years have never been so large and world’s appetite to hold its hands never so poor.
Dengue concerns
26 Sep, 2022

Dengue concerns

AS weather conditions change in Pakistan, the threat of dengue looms large over the land. According to a warning...
Relic of colonialism
26 Sep, 2022

Relic of colonialism

THE law on sedition, one of several holdovers of colonial times, is among the most handy instruments for controlling...