Resilient despite all odds –

Yes, deadly terrorist strikes every few months remind us that a security threat persists despite efforts to curb the menace; politics of confrontation is rife; economic growth is slow with not enough jobs being generated; corruption and the culture of patronage are deep-rooted and the sustainability of economic gains is doubtful. Does all this add up to depress the populace into resignation?

A visit to a super-store or a down-town market in any city will make one think again. Loaded trolleys and long lines at department store payment counters and the mad rush of traffic and pedestrians in traditional market places force observers to re-evaluate their perception of the country.

Multiple surveys confirm that consumers’ concerns and spending patterns are changing, drifting slowly towards those of their counterparts in developed countries.

More than anything, it is the growing consumer demand that is driving business activity, both local manufacturing and the influx of goods from other countries through formal and informal channels. Most fast-moving consumer goods providers and companies dealing in textiles and garments, mobiles, cars, home appliances, cosmetics, etc are not only doing well, but expanding. It explains the strong presence of major global players like Lever Brothers, P&G, Toyota, Suzuki, etc in the local market.

Consumers were found to be optimistic about the future and their personal finances … though about two-third of respondents believed that Pakistan is currently in a recession; many did not see it surmounting its challenges over the next year

True, after every major terrorist incident, markets do take a brief breather but bounce back as consumers refuse to bow down and instead come out shopping in bigger numbers thanks to the improving buying power of middle and asset owning classes.

According to a recent Nielsen Consumer Confidence Index, Pakistan scored 104 points against the global average of 98 points, with Africa and the Middle East region trailing at 89 points.

Consumers were found to be optimistic about the future and their personal finances by a global marketing research company. Their outlook is said to be positive, though about two-thirds of respondents believed that Pakistan is currently in a recession; many did not see it surmounting its challenges over the next year.

It assessed politically inclined Pakistanis to be family-oriented as after job security, their key concerns are about their children, education and parents’ welfare. For many the work/life balance haunts them as their next big concern.

A study of the spending pattern of extra cash, after covering for necessities, is interesting. In the absence of an effective social welfare net, the middle class saves almost half of its extra cash after budgeting for essentials. The residual cash is spent on clothing, new technological products and home improvement. These are the three heads that consume the highest portion of their spending followed by vacations, entertainment and investment.

Several consumer behaviour surveys, conducted across the country by different outfits including banks, marketing research firms and business houses, have reached broadly similar results. More credible ones, with greater circulation, are produced by the State Bank.

The Consumer Confidence Index shot up by 8.13pc over the period last reviewed, according to the State Bank report released last month (September 2016). The central bank carries out the exercise every second month.

Nielson, a global research firm, does a quarterly review and also provides comparisons. The Index was established in 2005 and draws trends based on 30,000 respondents with internet access across countries it assessed.

Its online survey methodology provides insights into the habits of internet users and not the total population. In countries with limited internet penetration it accepts that the respondents may be younger and more affluent.

Commenting on high consumer confidence and their profiling Dr Durr-e-Nayab, Joint Director, Pakistan Institute of Development Economics, attributed the high level of confidence to micro more than macro factors. “It would be impossible to explain multiple trends without taking into account the country’s huge informal economy that we know very little about”, she said referring to informal avenues of earnings of a family that are not documented.

She doubted, though, the high propensity to save assessed by Nielson as, in Pakistan, saving rates are the lowest in the region. “We need more information on the profile of respondents in Pakistan to be able to judge if it appropriately represents the society at large”, she observed.

Dr Nadeem Javed, Chief Economist Planning Commission, also endorsed the key finding that consumer confidence is high despite all odds. The discrepancy in public perception about the economy of the country and personal finances, he thought, was partially the product of negative media projections.

“If people are optimistic about their future personal finances the summation of individual construct for Pakistan should also be robust, but it is not. Besides negative projection in the media the explanation would not complete without factoring in the informal sector”.

Referring to the analysis of private marketing companies he said: “They are not developing these reports for evidence-based planning by policymakers, but for their clients, including fast-moving consumer goods companies. These companies need insight into the preferences of spending classes to design their marketing strategies. The sample often excludes the poor masses. So there is a possibility of misrepresentation if results are generalised”, he cautioned.

Published in Dawn, Business & Finance weekly, October 31st, 2016

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