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New Survey Shows Positive Consumer Confidence; Lower Inflation & Unemployment Projections

Gallup Pakistan and Dun & Bradstreet have jointly issued their report on ‘Pakistan Consumer Confidence Index (CCI)’ for Q3 2020.

The Overall Consumer Confidence Index (overall CCI) was 88.7 points in Q3 2020, compared to 79.1 points in Q2 2020, translating into 12.1% q-o-q increase. However, the overall consumer confidence in Pakistan has remained pessimistic in all three quarters of 2020.

The Consumer Confidence Index (CCI) is a reflection of current sentiments and future outlook as seen through the eyes of consumers across Pakistan. The CCI score is an indicator of consumer optimism/ pessimism about the economy, as well as their own financial situation. Consumer Confidence Index is a leading indicator of the economic health and social well-being.

The CCI report has been developed by assessing consumers’ confidence about the economy and their financial situation. The index covers four key parameters i.e. household financial situation, country’s economic condition, unemployment, and household savings.

The CCI ranges from 0 to 200, with 100 as the neutral value and a score of less than 100 indicating pessimism.

Current Consumer Confidence (Current CCI) growth of 7%, from 60.7 in Q2 to 65.1 in Q3, is healthy; showing signs of recovery.

Whereas Future Expectations (Future CCI) improved even more favorably, from 97.5 in Q2 to 112.4 in Q3, translating into a significant growth of 15.3% q-o-q amidst complete lifting of lockdown and normalcy in trade activities.

Dun & Bradstreet Pakistan Country Lead Nauman Lakhani stated, “The third issue of the Pakistan CCI report compares changes in consumer confidence from Q12020, which was a pre-Covid time, Q2FY20, which was during smart lockdowns and Q3FY20, which was when the lockdown was completely lifted. The current consumer confidence growth of 7pc as compared to the last quarter is healthy, showing signs of recovery in Pakistan.”

Key Findings

1. Household Financial Situation & Household Income

Perception about Household Financial Situation entered into green implying people’s household income seems to be rising after a decline due to COVID-19. During Q3, Household Financial Situation was the only CCI parameter to turn overall optimistic owing to improvement in Future Expectations. While 30% consumers believe that their income levels will improve in the next 6 months in Q3 compared to 28% in Q2 and 32% in Q1.

2. Country’s Economy Situation

Perceptions about the Country’s Economy have improved consistently across all three quarters of 2020, highlighting upbeat consumer sentiments. 2 out of 3 consumers (60%) expect the Country’s Economic Condition will improve / remain the same in the next six months during Q3 compared to 51% in Q2 and 54% in Q1.

3. Price Situation and Unemployment

Rising inflation and more importantly Unemployment continues to drag consumer enthusiasm. During Q3 survey, 91% consumers believed that daily essentials have continued to become expensive / very expensive compared in the last 6 months compared to 83% in Q2. While, 4 out 5 (77%) respondents believed that Unemployment has increased in the last six months in Q3 as compared to 80% in Q2 and 71% in Q1.

Future Employment Expectation: 3 in 5 Pakistanis expect unemployment will rise in the next 6 months

According to Dun & Bradstreet and Gallup Pakistan Consumer Confidence Index, 56% Pakistanis expect unemployment to increase in the next 6 months.

A nationally representative sample of adult men and women from across the four provinces was asked the following question, “In your opinion, in next 6 months, unemployment in Pakistan will be….?”  In response to this question, 18% said will be less, 16% said will remain the same, 26% said will increase and 30% said will increase a lot.

On the whole, consumers across all provinces, urban and rural locations, different age groups and genders were relatively more optimistic for future economic situations, than they were during the Q2 survey.

Gallup Pakistan Executive Director (ED) Bilal Ijaz Gilani said, “Consumer confidence in Pakistan has shown an upward trajectory for the third quarter in a row which shows that the pandemic’s impact on the economy and consumers is slowly tapering off. Gallup Pakistan foresees two main threats to this recovery trend, unemployment and inflation.”

Gilani warned that many of the recent wins may be lost if these two problems are not effectively dealt with. “Now is the time for fiscal and monetary policy instruments for public welfare.”

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Naya Daur