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 business 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.

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Views: 287

Comment by Riaz Haq on April 9, 2017 at 9:46pm

Asian Development Outlook 2017
https://www.adb.org/sites/default/files/publication/237761/ado-2017...

Pakistan
Growth accelerated in FY2016, benefitting from major economic reforms and improved security.
Low oil prices helped slow inflation markedly and keep the current account deficit moderate
despite weaker exports. The outlook is for higher growth, with inflation and current account deficit
edging up on higher oil prices and substantial imports for a major investment project. Continued
economic reform is essential to reach a high growth trajectory

Economic performance
Provisional estimates put GDP growth at 4.7% in FY2016 (ended 30
June 2016), driven by robust growth in services and industry (Figure
3.20.1). Growth recovery in large-scale manufacturing to 4.6% and
in construction to 13.8% underpinned 6.8% expansion in industry.
Automobiles, fertilizer, and cement were among manufactures with
notable growth. Industry expansion, fi nancial sector strengthening,
and increasingly active trade fueled 5.7% expansion in services,
which was 1.4 percentage points higher than in the previous year.
GDP growth was restrained, however, by a 0.2% fall in agriculture
output caused by adverse weather and pest infestations that led to
heavy crop losses, especially of cotton, which had knock-on eff ects on
textile manufacturing and external trade. To cushion the impact on
smallholder farmers, the government introduced a support package to
subsidize agricultural inputs.
On the expenditure side, private consumption continued to drive
growth, the substantial government contribution to it varying from
year to year depending on the fi nancial situation and wage adjustments
(Figure 3.20.2). Investment continued to be, at 15.1% of GDP, very low
when compared with similar countries in the region, constraining
growth. The main causes of low investment are infrastructure
weaknesses exemplifi ed in crippling power outages, a diffi cult business
environment, security issues, and bouts of macroeconomic instability.
Fixed investment from the government and public enterprises increased
by 12.9% to equal 3.8% of GDP, but private investment fell slightly from
10.2% of GDP to 9.8% (Figure 3.20.3). Net exports subtracted from
GDP growth, but the roughly 40% plunge in global oil prices in FY2016
improved the terms of trade by 10%, allowed the US dollar value of
imports to fall from the year earlier even as the government and the
private sector imported markedly higher volumes of goods other than oil.
Average headline consumer infl ation fell from 4.5% to 2.9% in
FY2016 because of lower global prices for oil and other commodities, 
stable food supply, limited government borrowing, and exchange rate
stability (Figure 3.20.4). At the same time, average core inflation, other
than food and energy, improved from 6.6% in FY2015 to 4.2%. As
inflation fell, the State Bank of Pakistan, the central bank, lowered its
policy rate by a cumulative 75 basis points to 5.75% (Figure 3.20.5). With
an improved economic environment and lower-cost borrowing, credit to
the private sector doubled to PRs461 billion, the strongest expansion in
recent years.

Comment by Riaz Haq on May 2, 2017 at 9:15pm

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

https://tribune.com.pk/story/1398602/pakistans-middle-class-continu...


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.

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