The business activity in Pakistan faces serious challenges as overall business activity in the country recorded very low ranking, says Pakistan Institute of Economic Development (PIDE). In its report ‘Business Barometer’ PIDE urged the government to adopt policies to improve business activities in the country.
According to a press release issued here by PIDE, businesses continue to operate in a challenging environment with stagnant production and sales volumes, they remain somewhat optimistic about their future prospects. It said that firms that have performed well in terms of production, sales and exports attribute their success to strong demand for their products. Meanwhile firms experiencing sluggish business activity have blamed shortage of utility supplies as a major bottleneck hindering their performance. Surprisingly, however, energy shortage is not the top most constraint faced by the firms which may be due to alternative arrangements made by the firms to cope with the energy crisis. Even though firms are optimistic about economic revival majority of firms have no plans to enhance their productive capacity, the report said.
Most of the businesses have reported increase in the prices during the first half of the year 2012 and expect them to increase in the second half of the year as well. However, they expect the inflation to remain in single digits.
A slight improvement in the permanent as well as the contractual employment shows little improvement in the labor market. The only significant change is observed in the textile sector where some firms laid off contractual employees. The laying off of contractual employees is consistent with the decline in the production and sales. On the other hand, slight improvement is expected in both the contractual and permanent employment statuses, especially in the sugar industry.Even though almost all the firms have reported to have a policy to increase wages once a year but not every industry is planning to increase wages. This implies that real wages are going to decline.
