Policy makers around the world use Business Confidence Surveys (BCS) as leading indicator for economic activity as these surveys are particularly suitable for monitoring and forecasting the short term changes in the economy. Especially, a forward looking monetary policy requires input on expectations of different agents. Conventional data is often available with long lags; business activity indicators, if timely available, provide comfort to the policy makers for analyzing the current situation and take appropriate policy actions to avert financial and other economic crises. These surveys also supplement the available quantitative data by providing motives and expectations behind their actions. A reliable system of qualitative short-term indicators can therefore be seen as a valuable complement to the system of quantitative statistics.
SBP is conducting Business Confidence Survey in collaboration with IBA. It aims to be representative of Pakistan’s businesses operating in various economic and geographic domains while ensuring the timely availability of survey data. A reliable business sentiment index will significantly extend the information base for SBP’s forward looking policy making.
A a number of agencies in advanced and emerging economies are conducting business tendency surveys with almost harmonized survey designs. The OECD Statistics Directorate has an extensive program of technical co-operation among its members to adopt a harmonized system for business tendency surveys. The OSED program also encourages non-member countries to adopt the harmonized system.
The details on these surveys across the countries are widely available on main features such as coverage, sample size, stratification scheme, frequency of survey and questionnaire design. Around 70 percent of these surveys are on monthly basis; all others, except Bangladesh, are carried out at quarterly frequency. Bangladesh conducts the survey on annual basis.
The samples are usually drawn randomly based on stratification over economic activities of economy, size of the firm and sometimes geography. The selection of economic activities, however, depends on the structure of economies; countries with large mining sector or tourism sector include these sectors, while most of the countries the survey covers manufacturing, services, construction and retail trade.
The sample size of SBP’s Business Confidence Survey is around 500 firms in manufacturing, construction, retail and wholesale trade, and other services.