Rising Business Confidence in Pakistan
Pakistan's private sector is showing a renewed sense of optimism, with business confidence reaching its highest level in nearly four years, according to the latest survey by Gallup Pakistan. This improvement comes despite ongoing challenges such as inflation, high utility costs, and electricity load-shedding that continue to impact business operations.
The survey, conducted between July 23 and 27, gathered insights from 524 businesses across manufacturing, services, and trade sectors. The results highlight a significant shift in perceptions about the country's overall direction. The "Direction of the Country Score" now stands at -2 percent, a marked improvement from the more pessimistic readings seen in late 2024. While still slightly negative, this score represents the highest level of confidence since the fourth quarter of 2021.
This uptick in confidence suggests a moderate easing of political and economic uncertainty from the perspective of the business community. A growing number of businessmen are beginning to believe that Prime Minister Shehbaz Sharif’s government is managing the economy more effectively than his predecessor, Imran Khan. According to Gallup, 46 percent of businessmen rated the current government’s economic management as better than the previous administration, compared to just 24 percent a year ago.
Gallup Pakistan Executive Director Bilal Ijaz Gilani described the survey findings as pointing to a "cautiously improving mood" among Pakistani businesses. He noted that while the shift is incremental, it reflects a growing sense of stabilization among economic actors. Key areas of improvement include perceptions of the country's direction and trust in the government's handling of the economy.
Business performance also showed encouraging signs, with 61 percent of respondents describing their current operations as "good" or "very good," an increase of six percentage points from the previous wave. However, the manufacturing sector reported comparatively slower signs of recovery compared to services and trade enterprises.
Looking ahead, 61 percent of businesses expressed optimism about the coming months, with the Future Business Confidence score improving by just one percentage point. This indicates that while businesses are not anticipating worsening conditions, there is limited momentum for stronger optimism at this stage.
Key Challenges Facing Businesses
Despite the positive trends, several challenges remain. Businessmen cited price hikes, high energy costs, and taxes as their biggest concerns. Consumer price inflation, which has eased to a record 0.3 percent in April from 38 percent in May 2023, was identified as the most pressing issue by 28 percent of respondents. High utility costs and taxation were also highlighted, though these figures showed slight decreases from the previous year.
Energy insecurity continues to affect operations, with nearly half (47 percent) of those surveyed reporting load-shedding on the day of the interview. While this figure is lower than during the same quarter in prior years, it still indicates some seasonal or regional relief.
Another notable shift in the survey is a substantial decline in reported bribery. Only 15 percent of respondents said they had paid a bribe in the past six months, down from 34 percent in Q4 2024. The prevalence of bribery was highest among traders (20 percent), followed by service providers (13 percent) and manufacturers (12 percent). This decline may reflect improving transparency or risk aversion among firms.
Government Response and Economic Reforms
Prime Minister Shehbaz Sharif expressed satisfaction over the latest Gallup Business Confidence Index report, which shows that Pakistani businesses' confidence in the national economy has reached its highest level in four years. He termed the survey results "highly encouraging," noting that the economic direction score has improved to -2, the best since the fourth quarter of 2021.
"These results reflect the business community's growing trust in the stability of the country's political and economic environment," he said. The prime minister credited institutional reforms, the digitization of the Federal Board of Revenue (FBR), and structural changes in the energy sector for opening new avenues for trade and investment.
He also highlighted improvements in macroeconomic indicators, better international credit ratings for Pakistan, and a decline in corruption and bribery as evidence of the government's sound economic policies. "The benefits of macroeconomic reforms have begun to reach the common man," he added, reaffirming the government's commitment to further enhancing institutional efficiency.
The Prime Minister also pointed to the Pakistan Stock Exchange's recent milestone, where the KSE-100 Index crossed an all-time high of 147,000 points. He lauded Federal Minister for Finance Muhammad Aurangzeb and his economic team for their "commendable efforts" and reiterated that the government is working to expand consultation with the business community to provide more facilities for investors and entrepreneurs.