Pakistan’s business confidence falls 9 points to 13% as Middle East tensions hit investment plans, survey finds 

Business confidence in Pakistan fell during the second quarter of 2026, with the Overseas Investors Chamber of Commerce and Industry’s (OICCI) Business Confidence Index dropping 9 percentage points to a positive 13% as Middle East tensions, inflation and fuel costs weighed on investment and operating plans.

According to OICCI’s Business Confidence Index Survey Wave 29, released on Tuesday, overall sentiment declined from 22% in Wave 28 to 13% in the latest survey. The report said the fall was mainly linked to inflationary pressures, higher fuel costs and the impact of the war in the Middle East.

Investment plans showed a sharper decline, with the New Investment Index falling 10 points to 2%, reflecting limited near-term capital deployment by businesses.

The survey found that around 70% to 80% of businesses across sectors were delaying or revising investment decisions and diversifying supply chains to reduce exposure to affected trade routes.

It said businesses were shifting focus towards risk mitigation and operational resilience.

Sector-wise, services recorded the steepest decline, falling 20 points to 14%.

Manufacturing confidence dropped by 7 points, while retail was the only sector to improve, rising 3 points to a positive 20%.

The survey’s global business situation indicator also deteriorated by 31 points.

Businesses across all sectors said they expected disruptions to continue beyond six months.

Looking ahead, 34% of respondents expected a negative outlook over the next six months, compared with 22% in Wave 28.

Respondents listed political instability, fuel prices and inflation as their main concerns.

Among structural threats to business growth, rising inflation was cited by 84% of respondents, followed by high taxation at 79%.

Concerns over currency stability and inconsistent government policies were each cited by 61% of respondents.

OICCI Secretary General Abdul Aleem said the latest results showed that companies operating in Pakistan were facing a more complex business environment. He said the effects of the Middle East conflict were visible across sectors, including investment delays and supply chain restructuring.

He said restoring confidence would require policy stability, cost relief and measures to protect the economy from prolonged geopolitical uncertainty.

Business confidence among OICCI member companies, which represent major foreign investors in Pakistan, remained relatively stronger and improved slightly to a positive 28%.

Metropolitan confidence fell 12 points to 11%, while non-metro cities, including Peshawar, Quetta, Rawalpindi, Multan, Sialkot and Sukkur, improved 3 points to 22%.

The survey also found growing interest in generative AI adoption.