Key Takeaways
- Pakistani consumers remain more pessimistic than businesses.
- The September State Bank of Pakistan–Institute of Business Administration Confidence Index stands at 49.1, while the Ipsos Consumer Confidence Index is 33.6.
- The gap is attributed to differing economic realities and measurement methodologies.
Latest surveys indicate a significant divergence in sentiment between Pakistani consumers and businesses. The September State Bank of Pakistan (SBP)–Institute of Business Administration (IBA) Confidence Index registered 49.1, compared to just 33.6 on the Q3 Ipsos Consumer Confidence Index.
Dr Durre Nayab, Director of Socioeconomic Insights and Analytics at the Pakistan Institute of Development Economics (PIDE), explained that the gap may be a measurement artefact. She noted that the SBP-IBA index is a diffusion index, where 50 signals neutrality, while the Ipsos index is constructed differently and has historically hovered in the 30s.
Ms Nayab also highlighted that the business survey draws from about 2,000 large, Securities and Exchange Commission of Pakistan-registered firms, with about 500 surveyed each month, selected based on the highest paid-up capital. This, she argued, captures the corporate top tier, not the small and medium enterprises (SMEs) or informal sector.
Nasim Beg, CEO of Arif Habib Consultancy, believes the contrast stems partly from their different perspectives. Businesses tend to be forward-looking, basing decisions on future economic conditions, while consumers respond more directly to their lived experience. He noted that over the last five years, Pakistani consumers have suffered a sharp erosion of purchasing power alongside income compression.
Ehsan Malik, former CEO of the Pakistan Business Council, attributed the divergence to contrasting economic realities rather than differences in understanding. He stated, 'Businesses are not immune to the economic challenges, but their ability to absorb and pass on costs is different from that of households.'
The Ipsos index, however, showed a slight positive direction, rising 0.4 points to 33.6, with 24 per cent of respondents saying the country is heading in the right direction, up from 11 per cent in August 2024.
The widening gap between consumer and business sentiment warrants closer scrutiny and explanation from policymakers, economists, and business leaders. This divergence could reflect differences in how businesses and households interpret economic indicators, varying levels of trust in the government, or their contrasting economic realities.
The financial strength of a minority with greater resources and capacity to absorb shocks contrasts with the struggles of a much larger population with weaker purchasing power and greater vulnerability.
To me, the gap is a measurement artefact. First, the two numbers aren’t on the same scale. The SBP-IBA index is a diffusion index, where 50 signals neutrality, zero indicates no confidence and 100 extreme confidence. The Ipsos index is constructed differently and has historically hovered in the 30s. So, 33.6 cannot be read as '16 points below neutral' in the same way that 49.1 can be described as 'near neutral.'
Dr Durre Nayab, Director, Socioeconomic Insights and Analytics, and former joint director at the Pakistan Institute of Development Economics (PIDE)
The average consumer’s behaviour is influenced by lived reality. Over the last five years, Pakistani consumers have suffered a sharp erosion of purchasing power alongside income compression. Even if the economic outlook is improving, households continue to feel the cumulative impact of that squeeze.
Nasim Beg, CEO, Arif Habib Consultancy
