KARACHI: The Business Confidence Index (BCI) dropped 21 percentage points to -25 per cent in March-April from -4pc recorded in September- October 2022, according to a survey conducted by the Overseas Investors Chamber of Commerce and Industry (OICCI).

The largest drop was recorded in the manufacturing sector (22pc), followed by retail and wholesale trade (21pc) and services (18pc). The survey sample consisted of 42pc respondents from manufacturing, 35pc from services and 23pc from retail and wholesale trade.

Overall, the manufacturing sector recorded a net confidence level of -19pc whereas services and retail/wholesale trade stood at -26pc and -35pc, respectively.

The three major threats to business growth identified in the survey were high inflation (as per 82pc respondents), high taxation (74pc respondents) and devaluation (72pc respondents).

According to OICCI President Amir Paracha, the significant drop in overall business confidence was not a surprise considering the volatile and extremely challenging economic situation in the past year. “The acute foreign exchange shortage throughout this period has affected imports and operations of many businesses, with hyperinflation, very high-interest rates and rapid devaluation negatively impacting the business environment,” he said.

The OICCI BCI Survey is conducted periodically across nine cities covering 80pc of GDP with higher weightage given to key business centres of Karachi, Lahore, Rawalpindi-Islamabad and Faisalabad. The OICCI Survey feedback covers the 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, 75pc respondents (versus 56pc in the preceding survey) were negative about the business environment in the past six months. Going forward, 23pc respondents (versus only 2pc in the preceding survey) were negative on the business environment expected in the next six months. The survey respondents expressed a gloomy business outlook for the next six months.

Sentiments of the OICCI members, who were also randomly included in the survey, stood at -19pc, substantially lower than 6pc recorded in the preceding survey. However, OICCI members’ business confidence was still lower than that of non-members, which has been a trend for a long period.

According to OICCI CEO M. Abdul Aleem, foreign investors’ feedback highlights their concern about restrictions on letters of credit for business operations, delays in overseas remittances for goods, services and dividends and fast-diminishing returns on investment in Pakistan.

Published in Dawn, June 14th, 2023