Business Confidence Worsens in Pakistan With 80% Investment Plans Delayed: Survey

Pakistan’s business confidence weakened significantly in the second quarter of 2026, with 70–80 percent of companies delaying or revising investment decisions amid rising economic uncertainty, according to the latest Business Confidence Index (BCI) Survey released by the Overseas Investors Chamber of Commerce and Industry (OICCI).

The survey, conducted nationwide during Q2 2026, showed the overall BCI falling by 9 percentage points to a positive 13 percent, down from 22 percent recorded in the previous survey wave.

According to OICCI, the decline reflects growing concerns over the economic fallout from the ongoing conflict in the Middle East, which has increased pressure on supply chains, fuel costs and inflation, while dampening investment sentiment.

The Services sector recorded the sharpest deterioration, with confidence dropping 20 points to 14 percent. Manufacturing confidence also weakened, falling 7 points. In contrast, the Retail sector was the only segment to improve, gaining 3 points to reach a positive 20 percent.

Investment activity showed a particularly sharp slowdown. The New Investment Index plunged 10 points to just 2 percent, indicating that businesses have largely paused near-term capital spending plans.

The survey found that between 70 and 80 percent of businesses across all sectors are either delaying or reassessing investment decisions while also diversifying supply chains to reduce dependence on trade routes affected by regional instability. Many firms are prioritising risk management and operational resilience over expansion.

Business expectations regarding the global economic environment also deteriorated sharply, with the survey’s global business situation indicator dropping by 31 points. Respondents across sectors expect disruptions linked to the Middle East conflict to continue for more than six months.

“The results of Wave 29 are a clear signal that businesses operating in Pakistan are navigating an increasingly complex environment,” said OICCI Secretary General M. Abdul Aleem.

“The ripple effects of the Middle East conflict are being felt across every sector, from investment freezes to supply chain restructuring. While the fundamentals of the Pakistani market remain intact, restoring business confidence will require policy stability, cost relief and a concerted effort to shield the economy from prolonged geopolitical uncertainty,” he added.

Looking ahead, 34 percent of respondents expect business conditions to worsen over the next six months, up from 22 percent in the previous survey. Political instability, fuel prices and inflation were identified as the leading concerns.

When asked about long-term challenges to business growth, 84 percent of respondents cited inflation as the biggest threat, followed by high taxation at 79 percent. Concerns over currency stability and inconsistent government policies were both highlighted by 61 percent of participants.

Despite the broader decline in sentiment, business confidence among OICCI member companies, which represent many of Pakistan’s largest foreign investors, remained relatively resilient and edged up to a positive 28 percent.

Regionally, confidence in major metropolitan centres fell by 12 points to 11 percent. However, non-metropolitan cities, including Peshawar, Quetta, Rawalpindi, Multan, Sialkot and Sukkur, recorded a modest 3-point increase to 22 percent.

The survey also highlighted growing interest in generative artificial intelligence. OICCI member companies reported higher levels of preparedness for large-scale AI adoption across technology platforms, business operations and workforce development, indicating that many foreign investors continue to position themselves for long-term growth despite near-term economic challenges.

The OICCI Business Confidence Index survey is conducted twice annually and covers businesses representing roughly 80 percent of Pakistan’s GDP.