Islamabad, April 22, 2020
According to a Gallup Pakistan Survey with business owners in the first quarter of 2020 for the Gallup Business Confidence Index reporting, business owners are increasingly pessimistic about the conditions of their businesses due to the unforeseen impact of coronavirus in Pakistan and the world.
The survey is the second of a Quarterly Business Confidence Survey that Gallup Pakistan aims to do in Pakistan. Business Confidence Index is an important barometer capturing the sentiments of business community in any country and used across the world by policy makers. The survey was conducted in the first Quarter of 2020 with around 500 businesses across Pakistan.
KEY QUESTIONS ANSWERED BY GALLUP BUSINESS CONFIDENCE INDEX:
The Business Confidence Index answers the following key questions:
- What do businesses think with respect to future of their business and the country?
- Are they hopeful or pessimistic about upcoming year?
- What is the biggest hurdle faced by the businesses?
In addition, the survey also measures the impact of the COVID-19 outbreak on businesses in Pakistan.
Gallup Business Confidence Index Pakistan is comprised of 3 strands. On all 3 strands the value was negative which meant that more businesses posed lack of confidence in the Business situation of Pakistan. The number fell significantly during the current time period eating away some healthy gains made between last Quarter of 2019 and first quarter of 2020.
Strand 1: Current Business Conditions
A sample of around 500 business owners and managers across Pakistan were asked the following question, “How well is your business doing nowadays. Would you say it is very good, good, bad, or very bad?” Before the COVID-19 outbreak in Pakistan, in response to this question, 36% said their business is doing good or very good, while 62% had a negative opinion.
After the Coronavirus outbreak, the percentage of businessmen with a positive view of the current conditions of their business fell to 15%, indicating a significant impact of the outbreak on perceptions of businessmen. Overall, net positivity fell significantly from -26% to -68% after the outbreak.
Strand 2: Expectations for the Future of Business
Business owners were further asked, “What are your expectations for the future of your business compared to the past?” Prior to the COVID 19 outbreak, 40% business owners were optimistic about the future of their business, which fell slightly to 38% after the outbreak.
Net expectation about the future of business fell from 9% in Q4 2019, to -4% during the initial months of 2020, falling further to -9% after the COVID 19 outbreak.
Strand 3: Direction of the Country Score
Business owners were then asked, “What is your opinion on the direction of the country? Are we headed in the right direction or wrong direction?” During the initial months of 2020, there was a slight rise in optimism of business owners about the direction of the country; from 37% to 39%. However, since the COVID 19 outbreak, optimism fell to 30%. Overall for the first quarter of 2020, 34% business owners were optimistic about the direction the country is heading in.
Net Direction of the Country
The initial months of 2020 saw a rise in the net rating for direction of the country, from -23% during Oct-Dec 2019, to -16%. However, a sharp decline to -32% was observed after the COVID-19 outbreak.
Impact of COVID-19 Outbreak
In order to understand the impact of the COVID-19 outbreak on businesses, business owners were then asked, “How serious a problem is coronavirus for your business currently?” 94% business owners claimed that coronavirus is a somewhat or very serious problem for their business.
Most Businesses in Pakistan are not considering laying off their employees
Further, business owners were asked “Are you considering laying off employees to minimize losses to your business due to Coronavirus?” 83% business owners reported that they are not considering laying off employees to minimize losses due to coronavirus, while 17% said they are considering layoffs.
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