Pakistan’s Business Confidence Rebounds, But Budget Concerns Persist: Gallup

Business confidence in Pakistan improved during the second quarter of 2026, with companies reporting better current conditions and a more optimistic outlook for the year ahead, according to the latest Business Confidence Index released by Gallup Pakistan.

The survey, conducted between July 2 and 7 among 527 businesses across manufacturing, services, construction, financial services, and wholesale and retail trade, showed improvements across all three components of the index.

The Current Business Conditions score improved to negative 10 percent from negative 19 percent in the previous quarter, while the Future Business Conditions score rose 25 percentage points to positive 12 percent, turning positive for the first time in three quarters.

Around 56 percent of businesses said they expect business conditions to improve over the next 12 months, while 45 percent described current business conditions as good. The Direction of the Country score also improved by 12 percentage points but remained in negative territory at negative 20 percent.

Gallup Pakistan said the improvement in sentiment was partly driven by easing geopolitical uncertainty following the resolution of the Iran-US conflict and lower fuel prices ahead of the survey period.

Despite the recovery, businesses continued to face major challenges. Inflation remained the top concern, cited by 34 percent of respondents, while 72 percent reported experiencing electricity outages on the day of the survey, marking a sharp increase from the previous quarter.

The survey also found that businesses remain unconvinced by the Federal Budget 2026-27. Thirty-nine percent rated the budget negatively compared with 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 said the recovery in business sentiment had not translated into confidence in fiscal policy, adding that sustained improvements in inflation, energy supply, and operating costs would be needed before the recovery could become durable.