Business

Pakistan’s business confidence score drops to negative 4%

Published

1 year ago

Farwa

OICCI conducts Business Confidence Index Survey – Wave 22 from Sept-Oct 2022.
Survey reveals highest drop in confidence was recorded in “services sector”.
Manufacturing sector records net confidence level of positive 3% despite drop of 20%.

KARACHI: Pakistan’s business confidence score (BCS) decreased to negative 4% in September-October 2022, against positive 17% in March-April 2022, Overseas Investors Chamber of Commerce and Industry (OICCI) announced on Wednesday.

The OICCI’s comprehensive Business Confidence Index (BCI) Survey – Wave 22 was conducted throughout the country from September to October 2022.

It revealed that the highest drop in confidence was recorded in the “services sector” (24%), followed by “retail and wholesale trade” (22%), and the manufacturing sector (20%).

The survey sample consisted of 42% respondents from the manufacturing sector, 33% from the services sector, and 25% from the retail/wholesale trade.

Despite recording a significant drop in confidence of 20%, the manufacturing sector recorded a net confidence level of positive 3%, whereas the services and retail sectors stood at negative 8% and 14% respectively.

Commenting on the BCS, OICCI President Ghias Khan said, “The substantial decline in the overall Business Confidence to negative 4% is regrettable but not surprising considering the highly challenging political and economic situation during the past six months.”

Besides very high inflation and increased fuel prices, significant currency devaluation also dampened economic activity.

“Record level of rains during August leading to severe flooding in Sindh and other parts of the country further restricted the business activities,” he added.

OICCI BCI Survey, conducted periodically face to face, across the country in nine cities, covering 80% of the GDP, with higher weightage given to key business centres of Karachi, Lahore, Rawalpindi-Islamabad, and Faisalabad.

The OICCI Survey feedback covers 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, more than half (56% vs 19% in previous wave) survey respondents were negative about the business environment in the past six months, and going forward only net 2% (vs 18% in the previous survey) were positive for the next six months.

Commenting on the business situation for the next six months, OICCI Vice President Amir Paracha said, “These are challenging times, and the authorities are doing all they can to navigate the enormous challenges in front including managing inflation, restricted availability of foreign exchange and resource constraints.”

Key stakeholders, especially foreign investors would continue to support the authorities in taking long-term policy measures to streamline the economic fundamentals including fair taxation for all, and facilitate business and investment in the country, he added.

The sentiments of the OICCI members, the leading foreign investors, who were randomly included in the survey, stand at positive 6%, substantially lower than the positive 33% in the previous wave. Foreign investors have in the past also shown higher confidence than non-members.

Commenting on OICCI members’ survey feedback, Ghias Khan, observed that “foreign investors’ feedback could have been more positive but for serious concerns on few critical issues like the undue delay in revising the pharma pricing and the extreme delays in overseas remittances for goods, services, and dividends”.

Such actions were seriously counterproductive for attracting foreign direct investment in the country. “The three major threats to business growth identified in the survey are inflation (78%), high taxation (71%), and currency devaluation (70%) which could potentially slowdown business growth in Pakistan, he noted.

Looking ahead, only 18% (34% in Wave 21) expect expansion in business operations, 2% (21% in Wave 21) planning new capital investment, and 7% of respondents (positive 16% in Wave 21) expect increased employment in their respective businesses.

Business

In intraday fluctuations, the rupee achieves a slight gain against the US dollar.

Published

11 hours ago

Farwa

The Pakistani rupee rose 0.04% versus the US dollar during early trading hours on Tuesday in the interbank market.

At 10 a.m., the rupee stood at 278.12 against the US dollar, up Re0.12 from the previous day’s finish of 278.24, which had seen a small decrease of Re0.03.

In a momentous development, Saudi Crown Prince Mohammed bin Salman is scheduled to visit Pakistan next week for important talks with Pakistani leaders.

These talks are scheduled to feature the signing of multiple Memoranda of Understanding (MoUs) targeted at increasing Saudi investment in industries such as agriculture, mining, human resources, energy, chemicals, and shipping.

On the global front, the US dollar rose against the yen on Tuesday, as huge interest rate differentials weighed on the Japanese currency.

The US dollar climbed 0.22% to 154.235 yen in early Asian trading, adding to its 0.58% rise the day before. On Friday, the yen fell to its lowest level since April 10, weighed down by softer-than-expected monthly US jobs data and signals of likely Bank of Japan action.

Meanwhile, oil prices rose slightly after Israeli strikes on Rafah in Gaza, amid continued talks with Hamas over a truce. Brent crude prices increased 0.28% to $83.56 per barrel at 0400 GMT, while US West Texas Intermediate (WTI) crude futures rose 0.31% to $78.72 a barrel.

This increase comes after a reversal of last week’s slump, during which both contracts suffered their worst weekly losses in three months, fueled by fears about disappointing US job statistics and speculation about the timing of a Federal Reserve rate decrease.

Business

Saudi investment and falling inflation cause Pakistani stocks to soar.

Published

1 day ago

Farwa

The benchmark KSE-100 Index increased by more than 1.50 percent on Monday, driven by the possibility of significant Saudi investment. Investors are now more optimistic that the central bank will soon begin a cycle of interest rate cuts, and another IMF programme is very much on the horizon.

The KSE-100 Index increased by 910.25 points, or 1.27 percent, by 1:29 pm PST to close at 72,812.34, having reached an intraday high of 73,060.74.

Additionally, on Monday, Ibrahim Al Mubarak, the deputy minister of investments for Saudi Arabia, stated that his nation preferred Pakistan’s economic growth and thought it was the best place to make investments.

The news is definitely good for equities that have been cheap since their market capitalization peaked in 2017, as many industries—energy, agriculture, technology, and mining being the primary ones—can now attract much-needed foreign investment.

The inflation of Pakistan

The consumer price index (CPI) for April increased by 17.3 percent, the lowest level since May 2022. This led to the benchmark index rising by 1244.45 points, or 1.76 percent, during the last session on Friday of last week.

This indicates that, like in March, annual inflation declined for the fourth straight month in April and stayed below the current record high interest rates of 22 percent. like a result, the State Bank of Pakistan may decide to begin reducing interest rates at its upcoming meeting on June 10.

While the pattern seen on Friday was also influenced by a market correction, the persistence of this most recent upswing indicates that investors are anticipating an economic recovery in the context of falling inflation and impending Saudi Arabian investment.

IMF APPEAL

In the meantime, the IMF continues to play a significant role in Pakistan, influencing not just public policy but also private sector initiatives and the lives of common citizens. Furthermore, the market was undoubtedly helped by the world’s largest lender’s most recent announcement of the upcoming transaction negotiations.

The Bretton Woods Institution said on Sunday that a delegation was scheduled to visit Pakistan this month to talk about a new initiative, prior to Islamabad starting the annual budget-making process for the upcoming fiscal year.

Although Pakistan’s $3 billion short-term programme helped prevent a sovereign default last month, Prime Minister Shehbaz Sharif’s administration has emphasised the necessity for a new, longer-term initiative.

The IMF responded to Reuters via email, saying that a mission is anticipated to visit Pakistan in May to review the FY25 budget, policies, and reforms under a proposed new programme for the wellbeing of all Pakistanis.

MERCURABLE BY SAMPLE

Meanwhile, it has been claimed that Saudi Crown Prince Mohammed bin Salman would pay a visit to Pakistan later this month. The kingdom has been making massive investments all over the world in an effort to become a more significant player in world affairs.

It makes sense that after years of political unrest and economic hardship, his presence and the Saudi investment will aid Pakistan in establishing itself as a desirable location for investors.

The explanation is straightforward: Saudi Arabia continues to be a significant actor in world politics. Nonetheless, the globe has begun to view MBS, the crown prince’s nickname, as a role model due to his policies of diversifying his nation’s economy and elevating the kingdom to a centre of commerce.

Business

Saudi investment is most suited for Pakistan, according to Ibrahim Al-Mubarak

Published

1 day ago

Farwa

Ibrahim Al Mubarak, the deputy minister of investments for Saudi Arabia, stated on Monday that his nation thought Pakistan was the best place to invest and wanted to see it flourish economically.

Speaking at the opening ceremony of the two-day Pakistan-Saudi Arabia Investment Forum 2024 in Islamabad, he stated that Saudi entrepreneurs were open to making investments in a variety of industries and that a significant portion of Pakistanis were contributing significantly to the growth of the kingdom.

ON THE DRIVING SEAT: PRIVATE SECTOR

Muhammad Aurangzeb, the finance minister, stated in his speech that the private sector should take the “driving seat” in order to revitalise the economy.

The finance minister stated, “The ministers and bureaucracy would have to lay back,” adding that the role of the government was to establish a framework.

According to Aurangzeb, the finance ministry was always there to support traders and company owners as he pursued economic reforms as part of the government’s objective.

Using the better rupee exchange rate as an example, he claimed that successful policies were bringing about economic stability.

The minister also mentioned that the government was trying to draw in foreign investment, but he also emphasised the need for continued policies to maintain economic stability and urged collaboration between the public and private sectors to build a robust economy.

Investing in Saudi Arabia

A high-level group of 50 Saudi businesspeople and investors, together with government representatives, arrived in Pakistan earlier on Sunday to attend an event aimed at encouraging investment from the oil-rich Gulf State.

Continue reading: Saudi entrepreneurs arrive in Islamabad as Pakistan seeks foreign investment

This happened only a few days after Saudi Arabia hosted Prime Minister Shehbaz Sharif for a Special Meeting on Global Collaboration, Growth, and Energy for Development in Riyadh. During his visit, he also had talks on a number of topics with Crown Prince Mohammed bin Salman.

SUMMARY CONVERSATIONS

The audience was informed by Commerce Minister Jam Kamal that every attempt would be made to facilitate international investors and have fruitful discussions between Pakistan and Saudi Arabia.

Representatives from thirty Saudi firms made the comments while in Pakistan looking for opportunities to engage in a range of industries, such as agriculture, aviation, human resources, and minerals.

Islamabad has been depending on Saudi investment to spark economic activity in the nation, which will not only boost investor confidence domestically but also aid in persuading businessmen from other countries to prioritise Pakistan, given that the country’s economy is crippled by inflation and high interest rates.

Not a shortage of proficient labourers

In his speech, Saudi Arabia’s Minister of Petroleum, Musadik Malik, emphasised the country’s recent rapid progress as well as the necessity of deepening the two countries’ already-existing bilateral relations.

He claimed that Gwadar would soon become a global transit hub and that Pakistan possessed abundant mineral riches. Malik assured the audience that Pakistan did not lack skilled labour.

It’s a narrative in progress. Details will be provided later.