A country prospers when its business community remains smoothly engaged in production and trade. Household consumption has the main role in GDP. For this , behavior of consumers matters a lot. It is essential to know what actually consumers' confidence are about the economic & business conditions and their own financing abilities or their own buying capacity. Consumer Confidence Index (CCI) is the indicator that shows their consumption and saving in future. It reflects optimism, pessimism or neutrality of consumers.
If CCI is low it reflects the pessimism of consumers. Such consumers tend to go for saving rather then spending. In this case, businesses are affected due to fall in aggregate demand. A reliable data helps businesses go for investment expecting better payoff in future.CCI above 100 indicates the boost in consumers' expectations.
According to statistic.com:
"The Consumer Confidence Index for China ranged at 77.3 points in March 2023, up from 72.8 points in the previous month. In comparison, the Consumer Confidence Index for the United States stood at 51.4 points in March 2023.27"
In Pakistan, IBA and State Bank of Pakistan conduct surveys on telephone every second month. 1600 households are asked five questions e.g. 1. How do you assess present financial position of your family compared to the last six months? 2. How do you assess present general economic condition of the country compared to the last six months? 3.In your opinion, compared to the last 6 months, how do you see the current time for buying durable goods such as furniture, refrigerator, television etc.? (Source: SBP's website)
tradingeconomics.com reports:
Pakistan Consumer Confidence Lowest since 2012
The Consumer Confidence Index in Pakistan fell to 29.5 in February of 2023, the lowest reading since September of 2012, from 33.2 in January. There were deteriorations in the current economic conditions (26.5 vs 30) and expected economic conditions (32.6 vs 36.4). Also, expectations over the next six months slumped for financial conditions of households (39.9 vs 44.2). Meanwhile, unemployment concerns in the next six months increased (78 vs 73.6) and inflation expectations advanced (80.2 vs 75.8) source: State Bank of Pakistan
However, this important indicator of the economy's strength requires authentic data which cannot be gathered if consumers are ignorant.