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Consumers’ confidence about future economic climate deteriorates in November

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December 10, 2020 (MLN): Pakistani Consumers’ view about the current economic climate and future economic conditions of the country once again deteriorated amid resurgence in covid-19 cases across the country and political uncertainty.

The overall Consumer Confidence Index (CCI) declined by 7.5% and overall Inflation Expectations plunged by 1% in November 2020 against the previous survey conducted in September 2020. Moreover, both the Current Economic Conditions (CEC) index and the Expected Economic Conditions (EEC) index showed decelerations.

The results of the latest Consumer Confidence Survey (CCS) conducted by SBP and IBA during 1-7th November 2020, showed deteriorated consumers’ sentiments as the decline in CCI is mainly attributed to a fall in the current economic conditions index (CEC) by 6.9% and the expected economic conditions index (EEC ) plunged by 7.97% from its value in September 2020.

The index ranges from 0 to 100 points, where anything less than 50 indicates that positive views are less than the negative views, or in other words, pessimism, while above 50 shows an optimistic attitude towards economic conditions in the next six months.

A CCI, an economic health indicator, provides insight into the current economic and financial position of households based on their consumption and saving patterns by assessing how many durable assets possessed by them in the last six months.

Not only this, it indicates future development of households’ consumption and savings based on the expected financial position and economic conditions in the next six months; mainly focuses unemployment and inflation which are two main challenging macroeconomic indicators for any economy to determine the output level and its growth.

The survey revealed that when it comes to personal income, consumers are generally optimistic. Particularly, the people are hoping that the next six months will improve their financial position, as the value of the future income index improved to 51.78 from 51.54 in September’20.

According to the survey, consumers’ assessment of unemployment conditions, jumped to a reading of 66.11 from 63.21 in September, indicating that consumers do not foresee labor market gaining strength as the resurgence of COVID-19 is further increasing uncertainty and exacerbating concerns about the outlook. Similarly, the expectations index based on consumers’ short-term outlook (next 6-months) for interest rate, surged to 60.37 from a reading of 58.59 in September.

As far as inflation indices are concerned, the survey data shows that though inflation expectations Index in November 2020 is slightly lower than the previous survey due to 1.12% fall in food inflation, it shows persistently high inflation expectations.

According to the data gathered by Mettis Global, the trend since 2015 shows that the overall CCI decreased by 4.39 points to 39.80 from 44.19 points i.e. down by 10% where CEC contributed more in the CCI as it plummeted by 20% whereas, EEC remained stable. In addition, since then the highest CCI reading has been 55.97 points, recorded in September 2018.

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Posted on: 2020-12-10T16:15:00+05:00

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