Loud pronouncements against the government from opposition leaders encamped outside parliament for a month seem to have finally induced some economic pessimism in Pakistan.
Consumers’ perceptions about current and expected economic conditions have recorded the single largest drop since January 2012, according to the Consumer Confidence Index (CCI) released on Monday. It is jointly conducted by the State Bank of Pakistan (SBP) and the Institute of Business Administration (IBA) after every two months.
The consumer confidence survey revealed CCI decreased to 133.81 points in September from 142.26 in July. The decline of 8.45 points is the single largest drop that CCI has recorded over any two consecutive editions of the survey since its inception in January 2012.
CCI is made up of expected economic conditions (EEC) index – which measures households’ expectations of economic conditions in the next six months – and the current economic conditions (CEC) index that captures households’ current economic conditions relative to the last six months.
It should be noted that the central bank’s latest monetary policy statement released on September 20 mentioned the ‘deterioration’ in the SBP-IBA consumer confidence survey as one of the reasons for keeping the policy rate flat at 10%.
Both sub-indices of CCI registered a substantial decline in September. The CEC and EEC shed 10.37 and 6.76 points, respectively, between July and September, the survey shows.
However, it revealed that relative to the preceding edition, households are now expecting a slight decrease in inflationary pressures over the next six months.
The average Consumer Price Index (CPI) inflation in 2013-14 remained 8.6%. The average CPI inflation during July and August was recorded at 7.4%. According to the SBP, the current outlook of around 8% average CPI inflation for 2014-15 may change adversely if electricity subsidies are cut and the Gas Infrastructure Development Cess is levied.
The survey also revealed that 21.27% of more than 1,800 surveyed households were ‘positive’ about their ‘income a year later’ as opposed to 18.58% in July. The response of 33.74% households was negative when asked about buying durable items in the next six months compared to 30.04% in July.
The percentage of households expressing interest in buying a car in the next six months has also decreased notably in September over July.
About 5.2% households surveyed in September were ‘positive’ on the question of unemployment as opposed to 5.86% in July, meaning they expected the level of joblessness in the country over the next six months would slightly increase.