Confidence among businesses regarding Pakistan’s overall direction has surged to its highest level in nearly four years, according to Gallup Pakistan’s latest Business Confidence Survey, signaling cautious optimism despite ongoing challenges such as inflation, hefty energy costs and power outages.
The survey for the second quarter of 2025, conducted from July 23-27 across 524 businesses in the manufacturing, services, and trade sectors, showed the “Direction of the Country” score improving to -2%, a sharp recovery from more pessimistic readings in late 2024. While still in the negative, the figure represents the highest confidence level recorded since the fourth quarter of 2021, when it stood at -18%.
“This uptick suggests a moderate easing of political and economic uncertainty from the perspective of the business community,” read the report. It also showed growing approval for Prime Minister Shehbaz Sharif’s economic stewardship, with 46% of respondents rating the incumbent government’s handling of the economy better than that of the previous Pakistan Tehreek-e-Insaf administration. Last year, just 24% of respondents had expressed the sentiment.
“The mood among businesses is cautiously improving,” said Bilal Ijaz Gilani, executive director of Gallup Pakistan. “While the shift is incremental, it reflects a growing sense of stabilization among economic actors,” he added.
According to Gilani, the most visible changes were in perceptions of national direction and trust in the government’s economic management. However, he cautioned that continued momentum depends on sustained macroeconomic reforms, policy consistency, and greater responsiveness toward informal sector businesses.
Improving Business Operations
Among respondents, 61% of businesses described their current operations as “good” or “very good,” marking a six-point increase from the previous quarter. The services and trade sectors posted the largest gains, while manufacturing showed slower signs of recovery.
Looking ahead, 61% of businesses expressed optimism about the coming months, though Gallup noted the Future Business Confidence score rose only one percentage point, indicating cautious expectations.
Inflation, Energy Top Concerns
Despite the uptick in sentiment, structural challenges persist. Inflation remains the top concern, cited by 28% of respondents as the most urgent issue requiring government action. Though inflation eased dramatically to 0.3% in April—down from 38% in May 2023—high utility costs (18%) and taxation (11%) continue to burden businesses.
Nearly half (47%) of surveyed businesses reported experiencing electricity load-shedding on the day of the interview, a lower figure than previous years but still a significant operational hindrance.
Bribery Declines
A notable finding was the decline in reported bribery. Only 15% of businesses said they had paid a bribe in the past six months, down sharply from 34% in Q4 2024. Bribery was most prevalent among traders (20%), followed by service providers (13%) and manufacturers (12%).
While still a concern, the decline could indicate improving transparency or increased risk aversion among businesses, the report said.
Cautious Optimism
Overall, the survey points to a measured improvement in private sector sentiment. Business leaders are showing increased confidence in current operations and the country’s direction, but forward-looking optimism remains tempered by persistent issues such as inflation, energy reliability, and governance.