Rising consumer confidence

Despite various economic challenges, Pakistan's consumer confidence shows an upward swing. According to the Nielsen Global Survey of consumer confidence and spending intentions, consumer confidence has reached an all-time high of 111, up by nine points in the third quarter (July-September) of 2017, from 102 points in the previous quarter (April-June). The survey data highlights a positive perception of job outlook, increasing from 47 per cent in the second quarter to 57pc in the third quarter. The number of respondents optimistic about the state of their personal finances has gone up by two percentage points from the second quarter to 66pc, resultantly immediate-spending intentions has reached 49pc, compared to 46pc in the second quarter 2017.

The report says that a nine-point increase in Pakistan's consumer confidence score depicts an improving outlook for the country. Since Nielsen launched the survey, this has been the highest number reached to date, which can be attributed to several reasons such as the growth in the agricultural sector, controlled inflation, strengthened power supply and most importantly, the uplift in the job market. Pakistan is flourishing and is rated as one of the top growth markets in the Middle East & Africa region. The survey data highlights a positive perception of job outlook, increasing from 47% in the second quarter to 57% in the third. Although there has been a one percentage point dip in job security being the biggest concern over the next six months, it still remains the top concern amongst 21% of Pakistani consumers. Consumers are spending more on vacations and technology in third quarter, suggesting that they have more disposable cash.

Regionally, there has been a one-point increase in the index level. Africa / Middle East has also witnessed a one percentage point increase in the job prospects (38%), with no change in the state of respondent's personal finances. Spending intentions increased one percentage point to 34%.Four out of six Africa / Middle East markets showed consumer confidence gains. Pakistan's consumer confidence rose the most, by nine points (which stands at 111). United Arab Emirates (112), South Africa (83) and Egypt (81) were amongst the other countries showing an increase in consumer confidence index. Conversely, consumer confidence fell in Morocco (72) and Saudi Arabia (93), declining by five points in both countries. Established in 2005, the Nielsen Consumer Confidence Index is fielded quarterly in 63 countries to measure the perceptions of local job prospects, personal finances, immediate spending intentions and related economic issues of real consumers around the world. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism, respectively.

It is relevant to note that although the overall consumer confidence index has risen, the number of respondents who believe the country is in an economic recession has also increased since last quarter, reaching 71%. Only 26% of Pakistanis believe the country will be out of an economic recession in the next 12 months, and therefore their spending and saving habits have been negatively impacted. Close to 69% of consumers also admitted to changing their spending to save on household expenses, and the biggest cost-saving has been spending less on new clothes (39%). The findings of the consumer confidence reflect a favourable 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. China-Pakistan Economic Corridor is also a factor in the rising optimism among Pakistani consumers.