Karachi, December 29, 2023 – The latest Gallup Pakistan survey indicates a positive shift in business confidence regarding the economic climate of Pakistan.
The survey, conducted in the third quarter of 2023, reveals that business owners, despite ongoing challenges, are becoming more optimistic about their prospects, with expectations for a brighter future rising by 42% compared to the previous quarter.
While acknowledging prevailing economic and political crises causing business insecurity, the survey notes a significant improvement in overall business confidence. The Gallup Business Confidence Index report highlights that, despite concerns over inflation, utility bills, and political instability, fewer businesses express hopelessness compared to the previous quarter.
In terms of expectations for future business conditions, 61% of businesses surveyed expressed optimism, while 38% anticipated worsening conditions. The net future business confidence score improved by 42% since the previous quarter, reaching a score of 22%, according to the survey report.
Perceptions about the direction of the country have also improved, with 26% of respondents stating that Pakistan is heading in the right direction. The Direction of the Country score increased to -47%, showing a 30-percentage-point improvement compared to the previous quarter.
While the overall confidence of the business community remained relatively low, marked improvements were noted despite economic challenges dating back to 2022. Economic insecurity has increased throughout the year, yet the business situation score has improved by 25 percentage points.
Inflation remains a significant concern, cited by three out of 10 businesses, with the majority calling on the government to address the issue of rising prices. Political instability gained more attention in the third quarter, surpassing concerns about the devaluation of the rupee and fuel prices. Taxes and load-shedding have emerged as primary concerns for businesses.
Regarding the impact on employment, four out of 10 businesses reported layoffs in the quarter, leading to an 11% reduction in their workforce compared to the previous quarter. Over half of the businesses surveyed increased their output prices, indicating a proactive response to economic challenges.
Notably, 73% of surveyed businessmen did not express confidence that the caretaker government, led by Prime Minister Anwaar-ul-Haq Kakar, would effectively address the challenges faced by the country’s businesses.
Bilal Ijaz Gilani, the executive director at Gallup Pakistan, emphasized that the positive momentum seen in the survey reflects an improvement in business sentiment. He highlighted the importance of continued positive indicators in other areas, such as the stock exchange index, the current account deficit, and policy consistency, to sustain this positive sentiment in the coming quarters.
This quarterly Gallup Business Confidence Index report, the 11th of its kind, serves as a crucial barometer for gauging the sentiments of the business community in Pakistan. The insights garnered from this survey are valuable for policymakers and are used globally to inform economic strategies. The survey, conducted with approximately 530 businesses across Pakistan, provides an in-depth understanding of the evolving business landscape in the country.
