Continuing our yesterdays coverage of the SBP-IBA Consumer Confidence Index (CCI), here is a little nugget that politicians and political observers would like to nibble off on when they get time off from (Retired) General Musharraf and his heart problem.
And the nugget is that contrary to all the hype about the so-called confidence ever since PML-N took office, the CCI has in fact been wavering since May 2013. It had been on a steady rise since it was composed in January 2012, but between May and November 2013, the index has in fact dropped.
The interesting bit is that while Current Economic Conditions (CEC) index is faring well since May 2013; the Expected Economic Conditions (EEC) index isn .
A detailed look shows that the index measuring the peoples perception of current general economic conditions compared to last six months was 32 percent higher in November 2013 compared to May 2013. This shows that people think they are relatively faring better.
Similarly, the perception of whether this is a good time to buy a consumer durable, or to buy or build a house or whether next six months would be a good time to buy a car or motor cycles--all these are showing positive signs. However, when it comes to matters of inflation, unemployment and interest rates, the situation is unsatisfactory (see table).
Is this due to flawed perception or is this a true reflection of how the government policies would pan out? Or perhaps-in the context of business friendly verses market friendly argument-all the hype of confidence ever since PML-N took power was in fact about business confidence and not consumer confidence?
Lets leave these questions for further discussion. But for now, the politicians in both Federal and provincial governments should know better that in politics, perceptions are over-crucial. Ideologues on both ends of the podium can turn a good policy bad, if you give them the slightest of room to play with perceptions.
On that note, as Pakistans economic community takes this important step to capture and interpret anecdotal evidence and subjectivities, it would be nice if similar exercises are done to capture the consumer and business moods in each province. We are living in a devolved Pakistan, aren we?
The monetary policymakers and observers are not the only consumers of these kinds of perception surveys; businesses, politicians, political observers, etc., would also use this from time to time--and for that capturing the provincial moods are equally important.
Lastly, it would be interesting to see regular Federal and provincial governments approval ratings that one can compare with consumer and business confidence surveys. Any takers from the political science community!?
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What went wrong between May-Nov 2013
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Sub-indices %change
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HH financial position perception 3%
HH financial position expectation -12%
Economic condition perception 32%
Economic condition expectation -19%
Overall inflation expectation -23%
Food inflation perception -5%
Food inflation expectation -24%
Energy inflation perception -10%
Energy inflation expectation -26%
NFNE perception -6%
NFNE expectation -22%
HH income expectation -1%
HH durable item perception 16%
HH durable item expectation -3%
Car/M Cycle purchase expectations 4%
House construction/purchase perceptions 31%
Unemployment expectations -17%
Interest rate expectation -6%
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Source: SBP-IBA CCI survey
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