Tuesday, March 28, 2017

Nielsen: Pakistan Consumer Confidence Highest Since 2008

Consumer confidence index in Pakistan jumped five point from the prior quarter to reach 106 in Q4/2016, according to Nielsen’s global survey of consumer confidence for 63 countries released recently.

Source: Nielsen

Here's an excerpt of Nielsen's report Africa/Middle East region that includes Pakistan:

"Consumer confidence in the Africa/Middle East region declined in the fourth quarter, falling four points to 83, the lowest level in more than three years. Confidence was highest in United Arab Emirates, which held steady from the third quarter at 108. Pakistan was the only country where consumer confidence moved in a positive direction, rising five points from the third quarter to 106, the highest score for the country since it was added to the survey in 2008."

The share of Pakistani respondents worried about job security dropped to 21%.  51% of Pakistanis said they are optimistic about better job opportunities in the next 12 months, according to the survey.

“The findings of the consumer confidence reflect a favorable atmosphere in Pakistan. The set of factors that influence the confidence levels of Pakistani consumers goes beyond economics and business, and is reflective of improved security conditions, increased energy availability and low inflation rates,” reported the survey.

China-Pakistan Economic Corridor (CPEC) has also led to a higher activity in large-scale manufacturing and construction, opening more investment opportunities,” said Nielsen Pakistan Managing Director Quratulain Ibrahim, according to Pakistan's Express Tribune newspaper.  “We hope to see this optimism among Pakistani consumers during the coming months.”

Pakistani banks have boosted lending to businesses and consumers. Large-scale manufacturing sector borrowed Rs. 225 billion in 2016, up from Rs 119 billion in 2015. Consumer loans have jumped from Rs. 29 billion in 2015 to Rs. 70 billion in 2016. Auto financing soared 32% to Rs 30.7 billion in 2016, according to the State Bank of Pakistan as reported by Daily Times.

Pakistani consumers and businesses are feeling increasingly confident with improved overall security, rising foreign and domestic investments and  better employment prospects. They are earning, borrowing and spending more to further stimulate the economy thereby creating a virtuous cycle. Low oil prices and relatively subdued inflation are also helping. It's now up to Pakistan's political, economic and military leadership to maintain this growth momentum.

Related Links:

Haq's Musings

Pakistan's Economy and Security in 2016

Credit Suisse Global Wealth Report 2016

Pakistan's Middle Class Larger and Richer Than India's

Pakistan Translates GDP Growth to Citizens' Well-being

Rising Motorcycle Sales in Pakistan

Depth of Deprivation in India

Chicken vs Daal in Pakistan

China Pakistan Economic Corridor


Ahsan H. said...

This further corroborates the impression I have of Pakistan after my recent visit. Things are finally looking up there; the mood is definitely upbeat.

Thanks for sharing the good news. I am afraid the cynics --- best described by Oscar Wilde as those who know the price of everything, but the value of nothing --- will not be impressed.

Riaz Haq said...

Ahsan: "Thanks for sharing the good news. I am afraid the cynics --- best described by Oscar Wilde as those who know the price of everything, but the value of nothing --- will not be impressed. "

It also backs up the findings of the recent World Happiness report that saw Pakistan rise 12 places from 92 to 80 on happiness index.

I agree the cynics will not like it. It will make them very unhappy :-)


Anonymous said...

India is #1 in this report or am I misreading it?

Riaz Haq said...

Anon: "India is #1 in this report or am I misreading it?"

India's consumer confidence is 136, the highest among 63 countries surveyed. It increased 2 points last quarter.

However, the increase of 17 in the US consumer confidence last quarter in the best in the world.

Pakistan's increase of 5 points is the 2nd best in the world.

So the absolute value and change are both very important for businesses and economists.

Riaz Haq said...

Asian Development Outlook 2017

Growth accelerated in FY2016, benefitting from major economic reforms and improved security.
Low oil prices helped slow inflation markedly and keep the current account deficit moderate
despite weaker exports. The outlook is for higher growth, with inflation and current account deficit
edging up on higher oil prices and substantial imports for a major investment project. Continued
economic reform is essential to reach a high growth trajectory

Economic performance
Provisional estimates put GDP growth at 4.7% in FY2016 (ended 30
June 2016), driven by robust growth in services and industry (Figure
3.20.1). Growth recovery in large-scale manufacturing to 4.6% and
in construction to 13.8% underpinned 6.8% expansion in industry.
Automobiles, fertilizer, and cement were among manufactures with
notable growth. Industry expansion, fi nancial sector strengthening,
and increasingly active trade fueled 5.7% expansion in services,
which was 1.4 percentage points higher than in the previous year.
GDP growth was restrained, however, by a 0.2% fall in agriculture
output caused by adverse weather and pest infestations that led to
heavy crop losses, especially of cotton, which had knock-on eff ects on
textile manufacturing and external trade. To cushion the impact on
smallholder farmers, the government introduced a support package to
subsidize agricultural inputs.
On the expenditure side, private consumption continued to drive
growth, the substantial government contribution to it varying from
year to year depending on the fi nancial situation and wage adjustments
(Figure 3.20.2). Investment continued to be, at 15.1% of GDP, very low
when compared with similar countries in the region, constraining
growth. The main causes of low investment are infrastructure
weaknesses exemplifi ed in crippling power outages, a diffi cult business
environment, security issues, and bouts of macroeconomic instability.
Fixed investment from the government and public enterprises increased
by 12.9% to equal 3.8% of GDP, but private investment fell slightly from
10.2% of GDP to 9.8% (Figure 3.20.3). Net exports subtracted from
GDP growth, but the roughly 40% plunge in global oil prices in FY2016
improved the terms of trade by 10%, allowed the US dollar value of
imports to fall from the year earlier even as the government and the
private sector imported markedly higher volumes of goods other than oil.
Average headline consumer infl ation fell from 4.5% to 2.9% in
FY2016 because of lower global prices for oil and other commodities,
stable food supply, limited government borrowing, and exchange rate
stability (Figure 3.20.4). At the same time, average core inflation, other
than food and energy, improved from 6.6% in FY2015 to 4.2%. As
inflation fell, the State Bank of Pakistan, the central bank, lowered its
policy rate by a cumulative 75 basis points to 5.75% (Figure 3.20.5). With
an improved economic environment and lower-cost borrowing, credit to
the private sector doubled to PRs461 billion, the strongest expansion in
recent years.