Business Confidence in Pakistan hits nearly four-year high

August 11, 2025 (MLN): The confidence of Pakistan’s private businesses has surged in the country’s direction to its highest level in nearly four years according to Gallup Pakistan's latest survey.

Also an increasing number of businessmen have started thinking that Prime Minister Shehbaz Sharif’s government is managing Pakistan’s economy better than the previous government of his counterpart Imran Khan.

The improvement comes despite inflation, high utility costs and electricity load-shedding continue to hinder business operations.

The Gallup's business confidence survey for Q2 2025 was conducted between July 23 and 27 and captured the views of 524 businesses of Pakistan across manufacturing, services and trade sectors.

The standout finding from this quarter is a significant rebound in perceptions of the country’s overall direction.

Gallup’s “Direction of the Country Score” now stands at 2% a dramatic improvement from the far more pessimistic readings of late 2024.

While the score remains marginally negative it marks the highest level of confidence in national direction since Q4 2021. “This uptick suggests a moderate easing of political and economic uncertainty from the perspective of the business community,” the survey said

The number of businesses holding a good perception about Sharif government’s ability to manage the country's economy has significantly improved over the past year.

According to Gallup, 46% of businessmen rated the ruling Pakistan Muslim League-Nawaz government’s management of the economy as better than its predecessor, the Pakistan Tehreek-e-Insaf compared to just 24 percent a year ago.

Commenting on the survey Gallup Pakistan Executive Director Bilal Ijaz Gilani said the survey’s latest edition was pointing to a “cautiously improving mood” among Pakistani businesses.

“While the shift is incremental, it reflects a growing sense of stabilization among economic actors,” he said.

The most visible change Gilani said, was improvement in perception around the direction of the country and also positive trend in trust in the government’s handling of the econom

“As always, sustained momentum will depend on continued macroeconomic reforms, policy consistency and greater institutional responsiveness, especially toward businesses operating outside the formal sector,” said the official.

The business performance was another area that showed encouraging signs as 61% of respondents described their current operations as “good” or “very good,” up six percentage points from the previous wave.

According to the survey, while the services and trade enterprises reported the largest gains, the respondents from manufacturing sector underscored comparatively slower signs of recovery.

The survey found 61% of businesses optimistic 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 also limited momentum for stronger optimism at this stage,” the survey said.

Asked about challenges the businessmen cited price hike and high energy costs and taxes as their biggest concern which shows the structural challenges remain deeply entrenched in Pakistan’s business sector. 

Consumer price inflation which has eased to a record 0.3% in April from 38% in May 2023 emerged as the most pressing issue cited by 28% of respondents as the top priority for government action.

High utility costs, 18%, while concerns over taxation, 11%, a slight decrease from last year’s levels.

Energy insecurity also continues to affect operations as nearly half, 47%, of those surveyed said they were experiencing load-shedding on the day of the interview. 

“While still a concern, this figure is lower than during the same quarter in prior years, indicating some potential seasonal or regional relief,” according to the survey.

One of the more notable shifts in 2Q survey is a substantial decline in reported bribery. Only 15% 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%), followed by service providers (13%) and manufacturers (12%). 

Still concerning the Gallup survey said, this decline may point to improving transparency or risk aversion among firms.

Overall, the survey indicates a measured improvement in private sector sentiment, especially regarding the businessmen’s perceptions of national direction and current business operations.

However, the survey found that forward-looking confidence of the businessmen has plateaued and longstanding challenges like inflation, energy reliability and governance remain central to Pakistan’s business climate.

Gallup’s Business Confidence Index is an important barometer capturing the sentiments of business community in any country and used across the world by policy makers.

Copyright Mettis Link News