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