Key Takeaways
- Pakistan’s business confidence improved during the second quarter of 2026.
- The Current Business Conditions score rose to negative 10 percent from negative 19 percent.
- Despite optimism, businesses remain concerned about inflation and the Federal Budget.
According to Gallup Pakistan’s latest Business Confidence Index released in July 2026, business sentiment in Pakistan has shown a positive shift during the second quarter of that year. The survey, conducted among 527 businesses across various sectors including manufacturing, services, construction, financial services, and wholesale and retail trade, highlighted improvements in all three components of the index.
The Current Business Conditions score improved significantly to negative 10 percent from a previous negative 19 percent, marking a positive change. The Future Business Conditions score also saw an increase by 25 percentage points to reach a positive 12 percent for the first time in three quarters. This improvement reflects a more optimistic outlook among businesses regarding future prospects.
Around 56 percent of surveyed companies expect business conditions to improve over the next 12 months, while 45 percent described current business conditions as good. However, despite these positive indicators, inflation remains a major concern for businesses, with 34 percent citing it as their top worry. Additionally, 72 percent reported experiencing electricity outages on the day of the survey, indicating ongoing challenges in energy supply.
The Direction of the Country score improved by 12 percentage points but still remained negative at negative 20 percent. Gallup Pakistan attributes this improvement partly to easing geopolitical uncertainty following the resolution of the Iran-US conflict and lower fuel prices ahead of the survey period. However, these positive factors have not yet translated into broader confidence in the country’s direction.
Despite the recovery in business sentiment, concerns about the Federal Budget 2026-27 persist. Thirty-nine percent rated the budget negatively compared to just 18 percent who viewed it positively. Nearly half of respondents said the budget had reduced their confidence in business prospects, while 49 percent expected it to increase the cost of doing business and 34 percent said it had made them less likely to invest or expand.
Gallup Pakistan Executive Director Bilal I. Gilani expressed that sustained improvements in inflation, energy supply, and operating costs are necessary for a durable recovery in business sentiment. He added that businesses remain unconvinced by the Federal Budget 2026-27, highlighting ongoing challenges despite recent positive developments.
The survey underscores the complex economic landscape in Pakistan, where while there is optimism about future conditions, significant concerns persist regarding inflation and the impact of government policies on business operations. As the country moves forward, these factors will continue to shape the business environment.
Despite the recovery in sentiment, businesses remain unconvinced by the Federal Budget 2026-27.
Gallup Pakistan Executive Director Bilal I. Gilani, Executive Director of Gallup Pakistan
