Business confidence in Pakistan has turned negative in the first quarter of 2026, as rising energy costs and regional tensions weigh heavily on the private sector, according to a new Gallup Pakistan survey.
The latest quarterly survey shows a clear decline in sentiment across key indicators, including current performance, future expectations, and views on the country’s economic direction. Only 41 percent of businesses described their current conditions as good, marking a 13 percentage point drop from the previous quarter.
At the same time, more than four out of five businesses, or 81 percent, reported being negatively affected by regional tensions, mainly through rising fuel and energy costs.
The outlook for the coming months appears even weaker. While 44 percent of firms remain optimistic, a larger 57 percent expect conditions to deteriorate. This has pushed the net future confidence score down by 25 percent compared to the last quarter of 2025. Perceptions of the country’s direction have also worsened significantly. The score dropped to negative 32 percent from negative 8 percent, reflecting growing concern among businesses about the broader economic environment.
Rising costs remain the biggest challenge for companies. Around 62 percent of businesses identified inflation and input costs as their primary concern, while 37 percent pointed to inflation as the top issue. Concerns over fuel and petrol prices also increased, with 25 percent of firms highlighting them as a major pressure.
Energy reliability continues to be a key issue, with 57 percent of businesses reporting load shedding on the day of the survey. This marks a notable increase compared to the previous quarter and adds to operational uncertainty.
Regional tensions, particularly in the Middle East, have had a strong impact. About 81 percent of businesses reported negative effects, mainly due to higher fuel and energy costs. Nearly 58 percent said their energy expenses increased, while 73 percent reported an overall rise in costs.
Looking ahead, 76 percent of firms expect conditions to worsen further if regional instability continues over the next three months. The findings point to rising uncertainty and growing risks for business activity in the near term. Gallup Pakistan said the decline across all major indicators signals a clear shift toward pessimism, with external cost pressures playing a central role in shaping business sentiment.