Business confidence in Pakistan has improved, with 55% of entrepreneurs reporting that their businesses are doing well, according to the Gallup Pakistan Business Confidence Index for the fourth quarter of 2024. However, a majority still believe the country is not heading in the right direction, a sentiment linked more to political uncertainty than economic policies.
The survey recorded a 10% increase in positive business perception compared to the second quarter of 2024. Additionally, businesses rating their situation as “very bad” dropped by 7%. The services and trade sectors showed stronger recovery than manufacturing, which continues to lag.
Looking ahead, optimism about the future has surged. More than 60% of businesses expect an improved business environment, marking a 19% rise in confidence since the previous survey. The Net Future Business Confidence score increased by 36%, reflecting a more positive economic outlook.
The survey attributes the improved sentiment to falling inflation, macroeconomic stability, and lower interest rates. However, the ‘direction of the country’ score remained negative, meaning more businesses still feel Pakistan is moving in the wrong direction. The proportion of such businesses, however, dropped by 20%.
When asked which government handled the economy better, 41% favored the current Pakistan Muslim League-Nawaz (PML-N) administration, while 38% credited former Prime Minister Imran Khan’s tenure. The remaining 21% saw no difference.
Inflation remains the top concern for 30% of business owners, followed by issues related to power supply and operational costs. The number of businesses experiencing loadshedding decreased by 17% compared to the previous quarter, with 56% reporting no power outages on the day of the survey.
The survey also found that more service sector businesses than manufacturers and traders had reduced their workforce. Despite these challenges, all three indicators of business confidence have shown improvement since mid-2024, signaling growing optimism in the market.
This 14th edition of Gallup’s quarterly Business Confidence Survey covered 482 businesses across 30 districts, capturing the economic sentiment of small, medium, and large enterprises. The index is widely used by policymakers and analysts to gauge business confidence and economic trends.
