Daily Times

LAHORE: A latest global survey conducted by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA) has revealed that Pakistan business confidence rallies despite the Organisation for Economic Co-operation and Development (OECD) anguish, whereas the China-Pakistan Economic Corridor (CPEC) drives a clear rise in confidence for market.

The survey titled ‘Q2 2016 Global Economic Conditions Survey (GECS)’, released on Sunday, offers an early indication of how uncertainty will affect the OECD economies, with business confidence subdued despite an improving global outlook.

Fieldwork for the Q2 2016 GECS took place between June 3 and June 20, and attracted more than 1,200 responses from the ACCA and the IMA members around the world, including more than 130 CFOs. Nearly half of the respondents were from small and medium enterprises, with the rest working for large firms having more than 250 employees.

However, in his statement for Daily Times, Faye Chua, ACCA Head Of Business Insights, said there was a clear rise in confidence in Pakistan in the second quarter, after it was dragged down in Q1 by security problems most notably the Lahore attack in March. Businesses have continued to benefit from a series of aggressive rate cuts since 2014 the most recent of which was made in late May, he said.

Faye explained that the eventual implementation of the CPEC, a bilateral project that will involve hefty Chinese investment into Pakistan’s infrastructure network, would create opportunities for local firms. He observed that fears of global recession seemed to have eased over the past quarter as China’s currency stabilised, the US enjoys a consumer-led recovery and commodity prices have started to rise.

Yet low levels of confidence across Europe in the run-up to the UK referendum has offset some of those fragile gains as jittery markets from the US, UK and across the emerging world suffer declines. He added that there has been an improvement in global confidence outside of the OECD countries as the GECS showed that business confidence picked up a little, having hit a four-year low in the first quarter.

He said, “The number of firms that said their prospects have deteriorated over the past three months fell to 43% in Q2 from 48% in Q1.” “Much of the global improvement has come from outside the OECD. Recent price rises have bolstered commodity-producing countries, especially in Africa and the Middle East, and this has in turn increased expectations of government spending” Faye said.

He said although there had been a slight rise in confidence it is yet to translate into meaningful increases in capital expenditure and employment indices. Half of firms are still either cutting or freezing employment, while only 13% are increasing investment in staff, he said adding that only 16% of businesses have reported they are increasing investment in capital projects, compared with 41% that said they are reducing it.