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

5 comments:

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 :-)

http://www.riazhaq.com/2017/03/world-happiness-report-2017-pakistan.html

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...

#Pakistan’s middle class continues to grow at rapid pace - The Express Tribune

https://tribune.com.pk/story/1398602/pakistans-middle-class-continues-grow-rapid-pace/


KARACHI: The country’s middle class is experiencing a rapid growth, which is evident from the rising demand for consumer durables, education and health, according to the State Bank of Pakistan (SBP).

The central bank, in its latest report on the state of economy, said that the growth in the consumption pattern in the country is indicative of a budding economy.

“Several indicators show rising consumer demand in the country. These include a rise in consumer financing, an increase in the sale of consumer durables (automobiles and electronic goods) and a sharp growth in fuel consumption,” said the SBP.

“Furthermore, the IBA-SBP Consumer Confidence Index recorded its highest-ever level of 174.9 points in January 2017, showing an increase of 17 points from July 2016.”

While there are different parameters to count the number of people and households in the middle class or the middle-income group of an economy, consumer spending is one prominent barometer which provides a rough assessment.

According to prominent political economist S Akbar Zaidi, Pakistan’s middle class has grown rapidly in the last 15 to 20 years on the back of rising remittances sent home by expats and increase in foreign investment.

“The foreign investment, which came into the country after 2002, has had a trickledown effect on thousands of lives,” he said, adding that increased access to education and rising representation of people in political parties also reflected the growth in the middle class.

Zaidi said that Pakistan’s middle class is often referred to in the context of the number of consumer goods it purchases, ranging from washing machines to motorcycles.

Additionally, attempts to quantify the country’s middle class, largely based on income and the purchase of consumption goods, exhibit that 42% of the population belong to the upper and middle classes, with 38% counted as the middle class.

Middle class Pakistan

“If these numbers are correct, or even indicative in any broad sense, then 84 million Pakistanis belong to the middle and upper classes, a population size which is larger than that of Germany,” said Zaidi.

Meanwhile, Standard Chartered Middle East-North Africa and Pakistan Senior Economist Bilal Khan said that domestic consumption and consumer confidence are strong in the country.

“Monetary easing and lower energy prices can boost household discretionary incomes and, in this context, a strong and stable currency can also be expected to increase demand for imported consumer goods, both durables and non-durables,” he said.

On the other hand, in the central bank’s report, it was mentioned that electronic goods showed a sharp turnaround during first half (January-December) of current fiscal year, recording a growth of 14.5%, against a contraction of 8.2% during the same period of last year.

“Consumer durables like refrigerators (up 25%) and deep-freezers (up 54.4%) mainly contributed to this improved performance,” the report said.

“Furthermore, rise in energy supply in coming months, increase in consumer financing in a low interest rate environment, better market access for rural population, expansionary plans of leading players and foreign investment, all indicates a sustainable trajectory for the industry’s growth going forward,” it added.

Economic Bullshit

Separately, consumer financing posted an increase of Rs37.6 billion during first half of the current fiscal year. Auto finance continued to be the dominated segment, while personal loans showed a pickup as well.

“The net credit off-take of Rs13.7 billion of personal loans witnessed in first half of the fiscal year is the highest half-year figure in about a decade,” the report stated.

The SBP also highlighted a notable growth in the foods segment and a strong growth in the sub-segment of soft beverage.