Karachi, April 5, 2024 – A survey conducted by Gallup Pakistan has unveiled a notable uptick in business confidence attributed to the efforts of the new government in Pakistan towards economic revival.
Despite ongoing challenges, the business community appears to be cautiously optimistic about the future under the leadership of Prime Minister Shehbaz Sharif.
The survey, conducted in the first quarter of 2024, indicates that 47% of businesses in Pakistan, particularly those involved in garments, commodities, stationery, and gift items, perceive themselves to be in a less favorable condition. However, this reflects a three percent improvement compared to the previous quarter.
According to the Gallup Business Confidence Index, the current business situation score has seen a significant improvement, rising by seven percentage points to 6% in 1Q2024 from -1% in the preceding quarter. This suggests a growing sense of stability in the business environment despite ongoing economic uncertainties.
While economic security has yet to fully stabilize due to the prevailing political situation, the report notes a positive trend in the business sentiment. However, future business expectations remain somewhat pessimistic, with a net future business confidence score deteriorating by 16% since the last quarter, now standing at 4%.
Furthermore, the survey highlights a negative perception regarding the direction the country is heading in, with only 20% of respondents expressing confidence in Pakistan’s trajectory. The direction of the country score has declined to -60%, down 13 percentage points from the previous quarter.
In terms of concerns, inflation remains a significant issue for businesses, with more than two out of four respondents urging the government to address it. Additionally, concerns regarding utility bills and business-related legislation have become more prominent, while political instability and taxes have taken a backseat in comparison.
Regarding workforce dynamics, around three out of 10 businesses reported a decrease in their workforce over the past three months, marking a 6% decline from the previous quarter.
As Ramadan approaches, a majority of businesses indicated that their sales had worsened, reflecting the ongoing economic challenges faced by many enterprises. Moreover, a substantial portion of surveyed businesses expressed skepticism regarding the new government’s ability to address the country’s economic woes, with only 25% expressing some level of hope.
The survey also sheds light on issues such as bribery, with some service providers and manufacturers admitting to paying bribes in the past six months to sustain their operations. Additionally, perceptions of the government vary among businesses, with 45% viewing it as irrelevant to their operations, while 23% see it as a facilitator and 33% perceive it as a hurdle.
Despite claims of reduced load-shedding, the number of businesses experiencing power outages has increased by seven percent compared to the previous quarter, indicating ongoing infrastructure challenges.
Bilal Ijaz Gilani, Executive Director at Gallup Pakistan, emphasized the importance of stability and continuity in policies to address business community concerns. He urged economic and political stakeholders to prioritize engagement and actively resolve issues affecting businesses.
The latest survey, the 12th of its kind, underscores the significance of the Business Confidence Index as a crucial indicator of sentiment within the business community. With approximately 535 businesses surveyed across Pakistan, the findings provide valuable insights for policymakers and stakeholders navigating the country’s economic landscape.
