Pakistan’s business confidence drops to 13%

June 02, 2026 (MLN): Business confidence in Pakistan deteriorated significantly in the second quarter of 2026, with the overall Business Confidence Index (BCI) dropping 9 percentage points to a positive 13% from 22% in the previous survey, according to the latest Wave 29 survey released by the Overseas Investors Chamber of Commerce and Industry (OICCI).

The decline was largely attributed to the ongoing war in the Middle East, which has heightened inflationary pressures, increased fuel costs, disrupted supply chains, and weakened investment sentiment.

The survey showed that the Services sector suffered the steepest decline, falling 20 percentage points to 14%, while the Manufacturing sector recorded a 7-point drop. In contrast, the Retail sector was the only segment to register improvement, rising 3 points to a positive 20%.

Investment sentiment weakened considerably during the survey period, with the New Investment Index plunging 10 points to just 2%, indicating a near standstill in short-term capital deployment.

Around 70-80% of businesses surveyed reported delaying or revising investment plans and diversifying supply chains to reduce exposure to disrupted trade routes linked to the regional conflict.

The survey also found a sharp deterioration in perceptions of the global business environment, with the relevant indicator declining by 31 points. Businesses across all sectors expect the impact of the Middle East conflict to persist for more than six months.

“The results of Wave 29 are a clear signal that businesses operating in Pakistan are navigating an increasingly complex environment,” said M. Abdul Aleem, Secretary General of OICCI.

He noted that the conflict's ripple effects were being felt across industries through investment freezes and supply chain restructuring, adding that restoring confidence would require policy stability, cost relief, and measures to shield the economy from prolonged geopolitical uncertainty.

Looking ahead, 34% of respondents expect business conditions to worsen over the next six months, compared with 22% in the previous survey. Political instability, rising fuel prices, and inflation emerged as the most pressing concerns.

Inflation was identified as the biggest structural threat to business growth by 84% of respondents, followed by high taxation at 79%, while currency stability and inconsistent government policies were each cited by 61%.

Despite the broader decline, business confidence among OICCI member companies, which represent some of Pakistan's largest foreign investors, remained relatively resilient, improving slightly to a positive 28%.

Regionally, business confidence in metropolitan areas fell 12 points to 11%, while non-metropolitan cities including Peshawar, Quetta, Rawalpindi, Multan, Sialkot, and Sukkur recorded a modest 3-point increase to 22%.

The survey also highlighted growing interest in generative artificial intelligence, particularly among OICCI member companies, which demonstrated higher readiness for large-scale AI integration across technology platforms, business operations, and workforce development, signalling a continued focus on long-term transformation despite near-term economic challenges.

The OICCI Business Confidence Survey is conducted twice annually and covers businesses representing approximately 80% of Pakistan's GDP.

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