Business confidence declines in Pakistan as costs rise, outlook weakens: survey

Pakistan’s private sector sentiment weakened in the first quarter of 2026, with businesses reporting deteriorating conditions amid rising costs and external pressures, according to the 17th quarterly Business Confidence Survey conducted by Gallup Pakistan.

The survey, conducted in April 2026 based on responses from 510 businesses, showed declines across key indicators, including current performance, future expectations and perception of the country’s direction.

Only 41% of respondents described their current operations as good or very good, reflecting a decline of 13 percentage points from the previous quarter. The net proportion of firms reporting positive conditions dropped by 27%, indicating a shift toward negative sentiment.

Expectations for the coming months also weakened. While 44% of businesses expressed optimism, 57% anticipated further deterioration, with the net future confidence score falling by 25% compared to the previous quarter.

Perceptions about the country’s overall direction also worsened, with the score declining to -32% from -8%, according to the survey.

Businesses cited inflation as the most pressing issue, identified by 37% of respondents, followed by fuel and petrol prices at 25% and taxes at 11%. The share of firms that believed the government was making the right decisions declined by 5% from the previous quarter.

Energy supply remained a major concern, with 57% of businesses reporting load-shedding on the day of the survey, an increase of 15 percentage points.

The survey also indicated weakening confidence in economic management, with 46% of respondents saying governance had deteriorated, compared to 33% who reported improvement.

Regional developments, particularly tensions in the Middle East, were cited as a key factor affecting sentiment. Around 81% of businesses reported negative impacts, primarily due to rising fuel and energy costs.

Nearly 58% of firms said their energy expenses had increased, while 73% reported overall cost escalation compared to the previous quarter.

Looking ahead, 76% of businesses expect conditions to worsen further if regional instability persists over the next three months.

The report said the business environment is facing uncertainty driven by domestic economic pressures and external factors, with risks of stagnation in the near term.