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 taking 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 Institute of Business Administration. It aims to be representative of Pakistan’s businesses operating in various economic and geographic domains. The survey data is used to construct a business sentiment index, which significantly extends the information base for SBP’s forward looking policy making.
BCS is a bi-monthly telephonic survey conducted in second half of even number months (i.e. February, April, June, August, October and December). This survey targets large firms in manufacturing, services, construction, wholesale and retail trade and financial services sector spread across the country to seek their opinions on production, employment, demand for credit and economic conditions etc.
The sample is based on around 1000 large firms registered with Security and Exchange Commission of Pakistan (SECP). We selected firms with highest paid up capital within selected economic activities. The industry covers around 20 different manufacturing activities and construction according to their approximate value added as per latest Census of Manufacturing Industries (CMI). On the other hand, the services sector sample includes large firms working in retail and wholesale trade, health care, education, hotel and restaurants, transportation, consultancy, telecommunication and financial services.
The survey provides an opportunity for businesses to contribute directly to the policy formulation process by sharing their perceptions of current and future economic and business conditions.