Consumer sentiment: Rising from the rubble
There's no doubt sentiment has improved since the inflation tsunami of 2023–24. Official CPI data shows year-on-year inflation has plunged to multi-year lows after peaking at historic highs just over a year ago. The relief is real — the difference between treading water and drowning. Yet while fewer Pakistanis may feel like they're gasping for economic air, most are still a long swim from shore.
Consider the 'right direction' indicator. In Q2 2025, 42 percent of respondents said the country is headed the right way — a notable recovery from previous lows. But it still means most remain unconvinced. What's more revealing is the shift in framing. Back in February, the Q1 report declared that seven in ten Pakistanis believed the country was on the wrong track. In Q2, the headline flips the perspective: around two in five believe the country is on the right track. The numbers haven't moved much. The lens has.
The same rhetorical pivot is visible in expectations about the economy. The Q1 survey stated that four in ten expected the economy to get weaker in the next six months. Q2's version? Roughly two in five now expect it to get stronger. It's the same statistical territory, packaged to suggest momentum.
Nowhere is this more evident than in the claim that 'optimism has risen sharply… reaching its ever highest in 6 years.' Yet when one digs deeper, the exuberance begins to look premature. Only 29 percent of respondents actually consider the economy to be strong. Job confidence, while improved, stands at just 30 percent. And although comfort with household purchases has risen marginally, only one in five respondents currently feel comfortable making such purchases. That's a sobering reality, even if it's better than the 88 percent who said they were uncomfortable a quarter ago.
To be clear, the direction of change is positive. But these are not numbers of a confident consumer class. These are numbers of a population still grappling with economic stress, expressing a cautious sigh of relief rather than any surge of optimism.
Ipsos deserves credit for presenting time-series data, allowing for trend tracking over multiple quarters. But given how the survey has evolved into fodder for headlines and podium speeches, the gaps in methodology warrant scrutiny. The use of Computer-Assisted Telephonic Interviews (CATI) is pragmatic, and post-stratification by province, gender, and socioeconomic class (SEC) is standard. Yet the lack of detail around sampling precision, response rates, and the definitions of SECs leaves unanswered questions. There is also no mention of urban-rural balancing — a gap that matters, especially when rural respondents have repeatedly shown more optimism.
It's understandable why the government is eager to seize this narrative. A fragile rebound is more politically palatable than stagnation. But public policy shaped by cherry-picked numbers runs the risk of overlooking deeper vulnerabilities. Sentiment may be improving, but it is doing so from a historically low base. And the path to real economic stability remains long and uneven.
So yes, the mood is better than it was. But if this is what a 'record high' looks like, it serves as a reminder of just how deep the hole was to begin with.
Copyright Business Recorder, 2025
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
5 hours ago
- Business Recorder
Unchanged policy rate disappoints business community
KARACHI: The State Bank of Pakistan (SBP) has decided to maintain the policy rate at 11 percent, disappointing business community who had anticipated a cresting reduction Atif Ikram Sheikh, President FPCCI, apprised that the business, industry and trade community of Pakistan is disappointed with the monetary policy as it continues to be based on a heavy premium vis-à-vis Consumer Price Index (CPI), and the State Bank of Pakistan (SBP) has maintained status quo in the policy rate in its Wednesday meeting. Sheikh highlighted that the CPI, as per government's own statistics, stood at 3.20 percent in June 2025, but the policy rate continues to be 11.0 percent as of today – which reflects a premium of 780 basis points (bps) as compared to inflation and it makes no economic sense. He continued that after deliberations from the apex trade and industry platform with all industries and sectors, FPCCI had demanded a single-stroke rate cut of 500 basis points during the Wednesday's monetary policy committee (MPC) meeting to rationalise the key policy rate and align it to the vision of special investment facilitation council (SIFC) – and, the Prime Minister's vision for industrial development, import substitution and export growth. However, S M Tanveer, Patron-in-Chief, UBG, noted that the CPI is expected to be in the range of 3–4 percent for the months of July–August 2025 as per trade, industry and economists' expectations. Therefore, he had demanded, key policy rate should have been brought down to 6 percent. Separately, Abdul Mohamin Khan, VP FPCCI & Regional Chairman for Sindh Region, proposed that the interest rate should come down to single digit immediately to enable Pakistani exporters to some extent to compete in the regional and international export markets through reducing the cost of capital in a meaningful way. Aman Paracha, VP FPCCI, reiterated the apex body's stance that cost of doing business, ease of doing business and access to finance in Pakistan is at the lowest as compared to all its competitors in the export markets. Asif Sakhi, VP FPCCI elaborated that fortunately the decisive downward trend in inflationary pressures has been continuing for the past many months and the only viable solution to get back on economic growth trajectory is to support industry and exports. Meanwhile, President Karachi Chamber of Commerce & Industry (KCCI) Muhammad Jawed Bilwani expressed disappointment over the SBP decision to maintain the policy interest rate at an elevated 11 percent, contrary to the widespread expectation of a cut that could have brought the rate down to a single digit. He said that at a time when Pakistan's core inflation has significantly receded, there remains no sound economic justification for keeping borrowing costs prohibitively high. 'The State Bank has cited the uptick in inflation during May and June, along with concerns of a moderate rise in the coming months due to persistent pressures on energy prices, as reasons for maintaining the policy rate; yet, this rationale is neither convincing nor economically sound. Bilwani opined that even with inflation at its current level or marginally higher, there remains sufficient room to reduce the interest rate to a single digit, as many regional economies have done in similar or even more complex economic environments. 'By missing this critical opportunity to lower rates, the State Bank has not only dampened hopes for economic revival but also imposed a continued and unnecessary burden on an already strained private sector,' he said, adding that the decision to maintain interest rate was not only detrimental to domestic businesses, particularly SMEs and manufacturers, but also risks further stifling economic recovery, employment generation, and industrial revival. He pointed out that across the region and in comparable economies, monetary policy easing is actively being pursued to support growth. For instance, India's policy rate stands at 6.5 percent, Bangladesh around 8.5 percent, Indonesia at 6.25 percent, while Vietnam has brought its rate down to below 5 percent; all significantly lower than Pakistan's. He said that high interest rates have choked working capital availability, increased default risks, and escalated the cost of doing business, making Pakistani exports uncompetitive globally. 'The business community had hoped for bold, forward-looking monetary easing to complement fiscal consolidation efforts and re-ignite economic activity. The SBP's inaction instead risks prolonging stagflation, undermining job creation, and pushing more enterprises towards closure.' However, President of the Korangi Association of Trade and Industry (KATI), Junaid Naqi expressed deep disappointment over the SBP decision to maintain the policy interest rate at 11%, stating that the move overlooks the demands and pressing concerns of the business community. Naqi remarked that the country's economic indicators clearly justify a significant cut in the policy rate, ideally bringing it down to 6%, a level that industry stakeholders have repeatedly advocated for. 'Retaining such a high interest rate under the current economic climate is not only unjustified but will also continue to burden the already struggling industrial sector,' he said. According to the KATI President, inflation has notably declined and has now entered single digits, while improvements in foreign exchange reserves and a narrowing current account deficit indicate a stable macroeconomic environment all of which support the case for a more business-friendly monetary policy. 'Unfortunately, the Monetary Policy Committee has chosen to ignore these indicators and has kept the rate at one of the highest levels in the region, creating further uncertainty for business.' He warned that the high interest rate is adversely affecting small and medium enterprises (SMEs), limiting exports, discouraging new investments, and threatening job creation at a time when economic stability and growth are urgently needed. He emphasised that the private sector, especially manufacturing and export-driven industries, are under severe financial stress with no relief in sight. He appealed to the government and the State Bank to align the interest rate with the ground realities of the economy, enabling the revival of business activities and long-term economic sustainability. 'The monetary policy must now support growth instead of suppressing it.' Meanwhile, President of SITE Association of Industry Ahmed Azeem Alvi expressed deep concern over the decision to maintain the policy rate at 11 percent. He said that by disregarding the longstanding demand of the business community to bring the interest rate into the single digits, the central bank has dashed their hopes for economic recovery and growth. Alvi questioned the rationale behind not reducing the policy rate despite a visible decline in inflation. He urged the Finance Minister and the Governor of the State Bank to explain the justification for this decision and take the business community into confidence. 'Pakistan is currently receiving encouraging signals from the international community in the wake of its recent success in the Marka-e-Haq. At such a critical juncture, this decision seems ill-timed and presents a potential obstacle to the country's economic progress.' He added that the nation is united, and Pakistan stands on the brink of achieving significant milestones— making this an opportune moment for bold and forward-looking economic decisions. He hoped that the government, along with the Finance Minister and the Governor of the State Bank, would recognise the urgency of the situation, engage with the business sector, and take concrete steps towards restoring economic confidence and accelerating recovery. However, Salim Valimuhammad, Chairman of the Pakistan Chemicals & Dyes Merchants Association (PCDMA) expressed strong disappointment over the decision to maintain the policy interest rate at 11 percent, labelling it a setback for business sentiment and industrial growth. He urged Prime Minister Shehbaz Sharif, Finance Minister Muhammad Aurangzeb, and the Governor of the State Bank to immediately review the policy and reduce the rate to a single digit. He argued that lower interest rates are critical to stimulating economic activity, improving access to affordable loans, and fostering job creation. 'This is not a wise decision in my view, as inflation has already come down, and businesses are under enormous pressure. If such high interest rates continue, it will further burden the business community, which is already struggling.' Copyright Business Recorder, 2025
Express Tribune
5 hours ago
- Express Tribune
Industry dismayed by policy rate status quo
Listen to article The trade and industrial community has strongly reacted to the State Bank of Pakistan's (SBP) decision to leave its policy rate unchanged at 11%, which came in contrary to widespread expectations of a 50-basis-point reduction and calls for a massive cut to around 6%. In the run-up to monetary policy announcement on Wednesday, trade bodies had been releasing statements, calling on the central bank to make a drastic reduction in borrowing cost, which would trigger growth of industries and the overall economy and give a boost to exports and employment. In a statement, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Atif Ikram Sheikh remarked that the business, industrial and trade community was disappointed with the monetary policy as it continued to be based on a heavy premium vis-a-vis the Consumer Price Index (CPI). He highlighted that the CPI stood at 3.2% in June 2025 but the policy rate remained pegged at 11%, which reflects a premium of 780 basis points as compared to inflation and makes no economic sense. He pointed out that, after deliberations with different industries and sectors, the FPCCI had demanded a single-stroke rate cut of 500 basis points during Wednesday's monetary policy committee meeting. While expressing dismay over the central bank's decision to keep the policy rate unchanged at 11%, the Pakistan Hosiery Manufacturers and Exporters Association (PHMA) highlighted the unfavourable business climate, including high interest rates, ruthless taxation and a high cost of production and utilities. PHMA Central Chairman Muhammad Babar Khan argued that the policy rate status quo would hurt the growth of exporters and manufacturers in varying sectors. "Pakistan's policy rate is higher compared to the region, which makes it extremely challenging for exporters to compete with countries such as Vietnam, Bangladesh and India," he said. Meanwhile, Karachi Chamber of Commerce and Industry President Muhammad Jawed Bilwani, in a statement, said that at a time when Pakistan's core inflation had significantly receded, there was no sound economic justification for keeping borrowing cost prohibitively high. "The State Bank has cited the uptick in inflation during May and June, along with concerns over a moderate rise in the coming months due to persistent pressure on energy prices, as reasons for maintaining the policy rate. Yet, this rationale is neither convincing nor economically sound," he added. Bilwani saw sufficient room to reduce the interest rate to single digits as many regional economies had done in similar or even more complex economic environment. "By missing this critical opportunity to lower the rate, the State Bank has dampened hopes for economic revival," he said.
Express Tribune
5 hours ago
- Express Tribune
In pharma JV, Pakistan to import Russian insulin
Listen to article Pakistan is set to import insulin from Russia with the help of joint ventures between pharmaceutical companies of the two countries. In that regard, a high-level meeting was held under the chairmanship of Special Assistant to Prime Minister (SAPM) on Industries Haroon Akhtar Khan. Russian government representative Denis Nazarov, senior officials of the Ministry of Industries and Production, Ministry of National Health Services and Drug Regulatory Authority of Pakistan (DRAP) were present in the huddle. Discussions focused on the purchase of insulin from Russia, progress on pharmaceutical joint ventures and the development of protocols for policy implementation. It was noted that DRAP had earlier granted permission to Genetics Pharmaceuticals, Lahore, for the import of insulin from Russian firm Zavod Medisintez. Haroon Akhtar emphasised that the establishment of a pharmaceutical joint venture between Pakistan and Russia marks a significant milestone in strengthening bilateral relations. He noted that Pakistan is a major consumer of insulin and its regular supply from Russia could greatly benefit diabetic patients across the country. He stated that in line with Prime Minister Shehbaz Sharif's vision, efforts are underway to initiate local manufacturing of insulin. In this connection, a joint protocol between local manufacturers and Russian companies is expected to be finalised soon. He directed all stakeholders to develop a comprehensive proposal. Sources revealed that a registration letter for the import of insulin from Zavod Medisintez was issued by DRAP on May 5, 2025 in favour of Genetics Pharmaceuticals. Subsequently, the company applied for an increase in the maximum retail price (MRP) on the basis of a rise in the Consumer Price Index (CPI), which is allowed under the Drug Pricing Policy, 2018. A revised MRP letter was issued to Genetics Pharmaceuticals on June 16, 2025. The manufacturer is demanding the MRP quoted by the originator brand of insulin, Eli Lilly. However, the importer has not so far submitted any application and justification for the increase in MRP. It is relevant to mention that leading local manufacturers, Getz Pharma and BF Bio Sciences, are selling locally manufactured insulin at MRPs equal to or lower than the MRP permitted for insulin import from Russia. If the MRP of Russian-manufactured insulin is increased, it will be higher compared to that of another European company, Novo Nordisk Pharma. The importer has two options to apply for increase in the MRP of insulin imported from Zavod Medisintez: an application may be submitted under the hardship category as per paragraph 9 of the Drug Pricing Policy, 2018 and the importer should submit evidence of import in commercial quantity from Russia. The MRP will be calculated on the basis of import price of the vaccine based on the value determined by Pakistan Customs on goods declaration under the Customs Act, 1969. The MRP will be based on the following formula: trade price = landed cost + 40% mark-up. The landed cost includes the import price converted into Pakistani rupees, customs duty, import levies and expenses. The MRP will be calculated by grossing up the trade price to provide for 15% retail discount. Hardship applications will be considered by the drug pricing committee and the MRP determined on the basis of above formula will be placed before the DRAP policy board. After endorsement by the board, the recommended MRP will be considered by a cabinet committee and its recommendation will be placed before the cabinet for approval.
