KARACHI: Business confidence has nosedived in the last six months across different sectors of the economy, according to the Business Confidence Index (BCI) Survey (Wave-22) released by the Overseas Investors Chamber of Commerce and Industry (OICCI).

Conducted across the country in September-October, the survey said the overall Business Confidence Score (BCS) dropped to negative four per cent, down 21 percentage points from the previous score of 17pc recorded in Wave-21 held in March-April.

“The substantial decline in the overall business confidence to negative 4pc is regrettable but not surprising considering the highly challenging political and economic situation during the past six months. Besides, high inflation, increased fuel prices and significant currency devaluation also dampened economic activity,” said OICCI President Ghias Khan.

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

Score drops to negative 4pc in Sept-Oct, down 21 percentage points from 17pc in Mar-Apr

The highest drop in confidence was recorded in the services sector (24 percentage points), followed by retail and wholesale trade (22 percentage points) and manufacturing sector (20 percentage points).

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

Despite a significant drop in confidence of 20 percentage points, the manufacturing sector recorded a net confidence level of positive three percentage points, whereas services and retail sector stood at negative eight and 14 percentage points, respectively.

The OICCI conducts this survey periodically and face-to-face in nine cities covering 80pc of GDP, with higher weightage given to key business centres of Karachi, Lahore, Rawalpindi-Islamabad and Faisalabad.

The OICCI survey feedback covers the business environment at regional, national, sectorial and entity levels in the past six months in addition to shedding light on the anticipated business and investment environment in the next six months.

Overall, 56pc of survey respondents were “negative” on the business environment in the past six months versus 19pc in the previous wave. Going forward, only 2pc respondents were “positive” for the next six months as opposed to 18pc in the previous survey.

The confidence level of OICCI members — leading foreign investors who were randomly included to the survey — stood at positive 6pc, substantially lower than positive 33pc in the previous wave. Foreign investors have in the past also shown higher business confidence than non-members.

Mr Khan observed that foreign investors’ feedback could’ve been more positive if it wasn’t for their concerns about a few critical issues like the delays in the revision of pharma pricing and in the processing of overseas remittances for goods, services and dividends. “Such actions are counter-productive for foreign direct investment,” he said.

The three major threats to business growth identified in the survey are inflation (78pc), high taxation (71pc) and currency devaluation (70pc).

Looking ahead, only 18pc respondents — as opposed to 34pc in Wave-21 — expected expansion in business operations. About 2pc respondents were planning new capital investment as opposed to 21pc previously. Around 7pc respondents expected increased employment in their respective businesses versus 16pc six months ago.

Commenting on the survey, PTI Secretary General Asad Umar said the incompetent and inept government’s flawed policies and “worst fascism” have caused a “colossal damage” to the national economy in the last eight months.

Published in Dawn, December 8th, 2022