The confidence of consumers in Pakistan’s economy deteriorated in the first quarter of 2021 due to toughening restrictions following a surge in Covid-19 cases in the country to contain the third wave of the pandemic.

During the Jan-Mar quarter, all consumer confidence parameters recorded a decline.

The consumer sentiment factor registered a strong deterioration as it fell 16% owing to uncertain economic conditions on account of re-imposition of smart lockdowns across the country, stated the Consumer Confidence Index (CCI) report for the first quarter of 2021. The report, prepared by Dun and Bradstreet Pakistan and Gallup Pakistan, assessed consumer confidence in the overall state of the economy as well as their personal financial situation.

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“Inflation rate hovering at a high level of 7-8% continues to suppress the purchasing power of common consumers,” said Gallup Pakistan Executive Director Bilal Ijaz Gilani.

During the quarter under review, the household financial situation indicator was the only parameter that managed to stay above 100 points.

The index covers four key parameters, ie household financial situation, country’s economic condition, unemployment and household savings. The survey reflects the current economic image, impact of policies over the past six months and future expectations of consumers across the country.

The CCI ranges from 0 to 200 points, with 100 being the neutral value. A score of less than 100 indicates pessimism. The index stood at 80.8 points in the first quarter of 2021 compared to 90.3 points in fourth quarter of 2020, translating into a decrease of 10.5% quarter-on-quarter.

The weakening of consumer sentiment was driven by restrictions imposed on business operations by the government to counter the third wave of the pandemic, said the report.

The prevailing uncertainty took a toll on consumers’ future expectations as the score dropped by 12%.

Consumer’s confidence in the current situation of the economy declined 8.3% in the Jan-Mar quarter compared to the last quarter of 2020.

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In the first quarter of 2021, a consumer was both increasingly concerned about the present economic situation and also apprehensive about the future, according to the CCI, said Gilani.

Concerns over unemployment are rising to mid-2020 levels as the government continues to impose lockdowns in major cities, curtail business hours and shut schools in the wake of third wave of the Covid-19 pandemic.

“The fifth issue of Pakistan Consumer Confidence marks the beginning of calendar year 2021,” said Dun and Bradstreet Pakistan Country Lead Nauman Lakhani. “A decline of over 10% quarter-on-quarter in consumer confidence reflects increasing concerns amongst respondents.”

Published in The Express Tribune, April 30th, 2021.

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