Karachi, September 04, 2023 – A recent survey conducted by Gallup Pakistan has revealed that a majority of businesses in Pakistan are deeply concerned about the country’s potential default.
The survey, which included responses from over 500 businesses in the second quarter of 2023, found that 72 percent of them expressed concerns about Pakistan’s financial stability.
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This concern persists despite Islamabad’s recent success in securing a $3 billion bailout package from the International Monetary Fund (IMF), which helped Pakistan avoid an imminent default.
Of the respondents, nearly half (49 percent) expressed significant concern, while 17 percent were not concerned at all, according to the Gallup Pakistan Business Confidence Index Q2 2023 report.
However, the survey also revealed that business owners were somewhat less pessimistic about the fate of their businesses compared to the previous quarter, despite ongoing crises such as worsening inflation and rising power costs. While inflation, utility bills, and rupee devaluation were cited as significant concerns, fewer businesses expressed hopelessness compared to the previous quarter.
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The business community remains negative about future prospects and the direction in which Pakistan is heading, with economic and political crises contributing to persisting business insecurity.
The survey indicated that inflation was the most pressing concern for business owners, as it has significantly eroded people’s purchasing power. Additionally, the depreciation of the rupee and the imposition of taxes were other issues that businesses wanted the government to address. Load-shedding, or power outages, also affected a rising number of businesses, with 69 percent reporting such issues.
Half of the businesses surveyed reported laying off employees due to tough business conditions in the quarter under review, marking a 13 percent increase over the previous quarter.
When asked about their current and future business situations and the direction of the country, the business owners expressed negative views on all three fronts. While the overall trend remained negative, there was a marginal improvement in business confidence compared to the previous quarter.
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The survey showed a 2 percent improvement in the current business situation score on Gallup’s second-quarter Business Confidence Index, despite rising economic insecurity in Pakistan since the beginning of the year.
Regarding the future of their businesses, 60 percent of respondents expressed negative expectations, while only 40 percent were optimistic about improvements. The Net Future Business Confidence score improved by 2 percent since the beginning of the year, reaching -20 percent, according to the survey.
An overwhelming 88 percent of business owners and managers believed that Pakistan was heading in the wrong direction, marking the most pessimistic view since Gallup Pakistan began recording this indicator. The Direction of the Country Score decreased to -79 percent, four percentage points lower than the previous quarter.
Half of the businesses surveyed reported increasing their output prices during the quarter, although fewer businesses raised prices compared to the previous quarter, and more businesses reduced their output prices.
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This survey, the 10th quarterly Business Confidence Survey conducted by Gallup Pakistan, involved around 560 businesses across Pakistan. The Business Confidence Index is an important indicator of business sentiment and is used by policymakers worldwide.
