Survey Shows Improvement in Pakistan’s Consumer Confidence in Q4 2020

Dun & Bradstreet Pakistan and Gallup Pakistan have issued their report ‘Pakistan Consumer Confidence Index (CCI)’ for Q4 2020.

The Consumer Confidence Index remained at 90.3 points in Q4 2020 as compared to 88.7 points in Q3 2020, translating into a 1.8 percent quarter-on-quarter (QOQ) increase.

This was driven by the improvement in the Current Situation, up 14.9 percent QOQ which was magnified by a recovery from a low base as sentiments were severely dampened during the past six months due to the pandemic.

Conversely, future expectations deteriorated for the first time since Q1 2020 due to cautious optimism by individuals because of the prevailing uncertainty amid a resurgence in the COVID-19 cases.

Moreover, the overall consumer confidence in Pakistan had remained pessimistic in all four quarters of 2020.

The CCI report has been developed by assessing Consumers’ Confidence about the economy as well as their personal financial situation. The Index covers four key parameters — Household Financial Situation, the Country’s Economic Condition, Unemployment, and Household Savings.

The Index is a reflection of the ‘Current Situation’ (economic changes experienced in the last six months), as well as ‘Future Expectations’ (changes expected for next 6 months) of consumers across the country. The CCI ranges from 0 to 200, with 100 as the neutral value, and a score of less than 100 indicating pessimism.

During this survey, optimism had improved for Household Financial Situation, the Country’s Economic Situation, and Unemployment, while it has declined for Household Savings. This is primarily attributed to consumers’ concerns about Future Household Savings.

This could have a cascading effect on asset-related investments in the country, and the overall spending by consumers. The perceptions about the Country’s Economy had improved consistently across all four quarters of 2020, highlighting upbeat sentiments by consumers.

Household Financial Situation was the most optimistic parameter which implied that people’s household incomes seemed to be rising after a decline due to the pandemic.

During Q4, Household Financial Situation was the only CCI parameter to turn optimistic overall, owing to improvement in the Current Situation. Meanwhile, 33 percent of consumers believe that their income levels will improve within the next six months in Q4 as compared to 30 percent in Q3, 28 percent in Q2, and 32 percent in Q1.

In contrast, rising Inflation, and more importantly unemployment continue to drag consumers’ enthusiasm as unemployment had remained the most pessimistic parameter.

Despite an increase in the overall optimism regarding Unemployment, three out of four (73 percent) respondents believed that Unemployment had increased over the last six months as compared to 77 percent in Q3. During a Q4 survey, 93 percent of consumers believed that daily essentials had continued to become either expensive or very expensive over the last 6 months as compared to 91 percent in Q3.

On the whole, consumers across all the provinces, locations (Urban and Rural), and different age groups were relatively more optimistic for the Current Economic Situation than they had been during the Q3 2020 survey.

Nauman Lakhani, the Country Lead of Dun & Bradstreet in Pakistan, remarked, “The fourth issue of Pakistan Consumer Confidence marks the end of the calendar year 2020. The report compares changes in Consumer Confidence from Q3 2020 to Q4 2020”.

He explained that “Current Consumer Confidence growth of almost 15 percent as compared to the last quarter is healthy; showing signs of recovery in Pakistan, but consumers were cautiously optimistic as Future Expectations have declined by 6.0 percent as compared to Q3,” adding that he envisions this Index to become “a barometer of economic well-being in the Country in the years to come”.

Bilal Ijaz Gilani, the Executive Director Gallup Pakistan, said, “At the end of 2020, Pakistani Consumer, whose pulse we measure in this CCI series, is cautiously optimistic about the future. The main drain on the household economy is the continually-felt heat of inflation and concerns about rising unemployment”.

He added, “We at Gallup believe that the real challenge is not to revive the economy to pre-COVID-19 times; we seem to be quite close to that already. The challenge is, rather, to resuscitate the economy to a galloping pace – the verdict is still out if the current upward trajectory is going to meet this ambitious goal”.

Source: Propakistani