Business Confidence Increases in Pakistan’s Economy, Doubts Persist Over Direction: Gallup

Pakistan’s businessmen are gaining confidence about the prospects of their businesses that they believe are improving, according to the latest Gallup survey. However, a majority of them still opine that the country is not heading in the right direction, a perception that the survey report said may be reflective of the overall political situation in Pakistan and less linked with economic management. According to the Gallup Pakistan Business Confidence Index Q4 2024 survey report, 55 percent of businessmen think of their businesses doing very good or good these days. This shows a 10 percent increase in their perception over the previous survey conducted about six months ago in Q2 2024. The fieldwork did not happen in Q3. The number of businesses that used to rate themselves as very bad has declined by 7 percent. The manufacturing sector seems to have recovered less than the services and trade sector when it comes to rating the current business situation, the report said. About their future, the business community is more optimistic as their score has risen 19 percent from six months ago. 60 percent of businesses in the Q4 survey showed positive expectations about their future while 40 percent see things worsening. The Net Future Business Confidence score has increased by 36 percent since Q2 2024. “Reduction in inflation, macroeconomic stability, and interest rate cuts contribute to large decreases in business pessimism,” according to the survey report. However, there still remain grey areas as the ‘direction of the country score’ remained in the red in Q4-2024 which means more businesses feel that Pakistan is moving in the wrong direction. The number of such businesses however has reduced by 20 percent from the previous survey as the index has improved from negative confidence to poor confidence as defined by Gallup in its methodology. “Overall trend for the past few quarters has been consistently negative, however, there has been some improvement in the current quarter, ” said the report. Asked which government managed the economy well, 41 percent of the businesses surveyed named the ruling Pakistan Muslim League-Nawaz while 38 percent rated the government of former Prime Minister Imran Khan as the better manager. 21 percent saw no difference in the performance of the two governments. The backbreaking inflation, which erodes the purchasing power of consumers, was cited as the most important problem 30 percent of businessmen would want the government to solve. The number of businesses facing power outages declined as 56 percent surveyed said ‘no’ load-shedding happened in their establishment on the day of the survey, while 44 percent replied in affirmative. On a quarterly basis, load-shedding decreased by 17 percent. “More service-providing businesses than manufacturers and traders decreased their workforce, ” the survey results showed. Overall, the report said, all three strands of Gallup Business Confidence have seen an improvement since Q2 2024, showing there is growing optimism in the business community. This latest survey is the 14th edition of a quarterly Business Confidence Survey that Gallup Pakistan conducted in more than 30 districts of the country, surveying 482 small, medium, and large businesses. The Business Confidence Index is an important barometer capturing the sentiments of the business community in any country and is used across the world by policymakers.