The survey presents a bleak image.
The business sentiment that the nation is moving in the wrong way has increased by 32%.
KARACHI:
Entrepreneurs in Pakistan are growing increasingly pessimistic about the prospects for their companies as a result of the country’s ongoing political and economic upheaval. 65% of business owners say their companies are struggling, according to a Gallup Pakistan study done in the last quarter of 2022 for the Gallup Business Confidence Index. Of all business types, industrial machines businesses are doing the best, with 75% of them believing that things are going well.
Conversely, cloth and apparel stores had the lowest levels of confidence, with 81% of them stating that the current business climate is unfavourable. Political and economic stability undoubtedly go hand in hand because corporate confidence is directly impacted by both, according to Taurus Securities’ Head of Research Mustafa Mustansir. According to what he saw happening in the nation, “politics is broken and divided, and the government does not seem to have the answers to our economic woes,” he said.
The survey’s results show that since the start of 2022, the Net Future Business Confidence score has declined by 50%, and it currently sits at a pitiful – 10%. The percentage of companies stating that the nation is moving in the wrong way has increased by 32% since earlier this year. In Punjab, Sindh, and Khyber-Pakhtunkhwa (KP), less than 15% of firms think that the nation is moving in the right path. Balochistan’s enterprises share this viewpoint to a quarter. Inflation continues to be the most common issue that businesses want the government to address by the end of this year, according to survey results from the first quarter of 2022.
Additionally, up to 72% of the firms questioned said load shedding happened every day. “The government should immediately engage industrialists in a policy discussion and try to minimise their problems to ensure at least moderate growth in large-scale manufacturing during the current fiscal year,” said Ahmad Jawad, CEO of the Pakistan Businesses Forum (PBF), in an interview with the Express Tribune. “It is true that there is little that the government can do to aid exporters in some sectors, like energy pricing, other than to allow subsidies to continue in the near run,” he continued. The government has relatively little fiscal leeway under the International Monetary Fund (IMF) criteria.
Similar to this, Pakistan’s reliance on a small number of nations and its lack of geographic export diversification pose a serious risk of economic instability, according to the PBF CEO. “The government should assist exporters in discovering new markets and negotiating Free Trade Agreements (FTAs), which will result in market diversification and support currency stability relative to the US dollar. This can significantly help to increase business confidence in the nation, he said. The fourth quarter saw a significant rise in the number of businesses that were subject to load shedding. According to the survey, load shedding affected about 19% of the companies within a day who said they had experienced it for two hours. Up to 81% of the companies polled stated that they do not think the legal system is impartial and fair.
According to the survey findings, more Balochistani businesses than those from any other province disagree with the notion that the legal system is impartial, fair, and free from corruption. The performance of a sample of more than 700 business owners and managers was questioned across Pakistan. Business confidence began to rise after COVID-19 reached its peak and the worst had passed. But in 2022, this confidence sharply declined. According to the survey, “This abrupt change and a 63% decline in the Current Business Situation score, may be due to ongoing political instability over the course of the year.”
“The government needs to focus on the basic requirements of the entrepreneurs, namely affordable energy, regular supply of raw materials, finance at single digit markup, efficient logistics, marketing support for exports, filling of the technological gap, and increasing agricultural yield per acre,” says Zulfikar Thaver, president of the Union of Small and Medium Enterprises (UNISAME). “The government is constantly engaged in politics, ignoring the factors that contribute to a stable economy. He emphasised that the government must roll up its sleeves and work with a proper agenda in addition to the need for real technocrats in the ministries of science, industry, information technology, commerce, and finance.
