A Business Confidence Survey was conducted by the Institute of Business Administration (IBA) in collaboration with the State Bank of Pakistan in August 2020 to measure business confidence in Pakistan. This survey provides aggregate statistics on the state and perceptions of the business community to not only assist policy makers in making timely decisions, but to also aid the State Bank of Pakistan in devising supportive policies for the business sector.

The results from the August 2020 survey indicate recovery in the overall business confidence index, which increased significantly from 39 in June 2020 to 52 in August 2020, as shown in the figure below. The index has moved from the negative red zone, where views of the business community about the economy are predominantly pessimistic, towards the green zone, indicating that the perception about business and economic conditions has become positive during this wave of survey collection.

In comparison to the last survey in June 2020, the perceptions of both industry and services sectors have also improved from being significantly negative to becoming positive, with the confidence index increasing from 36 to 51 for industries, and from 40 to 52 for services.

Moreover, the two sub-indices, Current Business Confidence Index (CBCI) and Expected Business Confidence Index (EBCI), also showed similar trends. While still remaining in the negative zone, the Current Business Confidence Index (CBCI) improved significantly from 30 in June 2020 to 42 in August 2020, depicting improvements in the perceptions about current economic and business conditions, production or sales, and hiring of employees as compared to the last round of surveys.

In terms of the Expected Business Confidence Index (EBCI), the index rose significantly from 47 in June 2020 to 62 in the current wave. This was driven by a substantial increase in the expected business confidence of the industry sector from 44 in June 2020 to 63 in August 2020 and notable improvement in the services sector from 49 to 62.

In addition to this, the perceptions about employment also improved. The Current Employment Diffusion Index showed slight improvement from 44 in the last wave to 47 now, while Expected Employment improved significantly from 50 in June 2020 to 56 in the current wave.

A full version of the report can be found here.