Pakistan’s private sector is feeling more upbeat than it has in nearly four years, with a Gallup Pakistan survey showing a marked rise in business confidence for the second quarter of 2025.
The survey, conducted July 23–27 across 524 businesses in manufacturing, services, and trade, found a notable shift in sentiment about the country’s overall direction. Gallup’s “Direction of the Country Score” climbed to -2%, the least pessimistic reading since late 2021, signaling that while businesses aren’t brimming with optimism, they see fewer clouds on the horizon.
Government’s Economic Handling Gets Warmer Reception
One of the most striking changes is in how business owners view Prime Minister Shehbaz Sharif’s economic management compared to that of former PM Imran Khan. This year, 46% rated the current government’s performance as better than its predecessor’s — almost double the 24% who felt that way in 2024.
Bilal Ijaz Gilani, Gallup Pakistan’s executive director, called it a “cautiously improving mood” that reflects a growing sense of stabilization. He noted, however, that sustaining the trend will require steady reforms, consistent policies, and more responsive institutions — particularly for businesses operating outside the formal economy.
Current Operations Improve, Future Outlook Stable
The survey shows 61% of respondents describing their present business performance as “good” or “very good,” a six-point increase from the previous quarter. Gains were strongest in services and trade, while manufacturers reported a slower recovery.
Forward-looking optimism, however, is moving at a crawl — the Future Business Confidence score edged up by just one percentage point. This suggests firms expect conditions to hold steady rather than accelerate.
Persistent Challenges: Inflation, Energy Costs, and Taxes
Despite the brighter mood, inflation and energy remain the toughest hurdles. Nearly three in ten respondents said tackling price hikes should be the government’s top priority, even though annual inflation dropped to just 0.3% in April from 38% in May 2023.
High utility bills were cited by 18%, while 11% pointed to taxation — slightly down from last year’s levels. Load-shedding is still common, with 47% of businesses experiencing power outages on the day they were surveyed, though that’s an improvement compared to past years.
Sharp Decline in Bribery Reports
A notable shift emerged in the survey’s corruption indicators: only 15% of businesses admitted paying a bribe in the past six months, down from 34% at the end of 2024. Traders reported the highest rate (20%), followed by service providers (13%) and manufacturers (12%). Gallup suggested this drop may indicate either greater transparency or higher risk aversion among firms.
Bottom line: Pakistan’s business sector is signaling a mild but meaningful recovery in sentiment, particularly about the country’s direction and the government’s economic management. But with inflation pressures, high energy costs, and governance concerns still entrenched, most firms remain in a wait-and-see mode rather than betting on a full economic turnaround.
