Karachi: Business confidence in Pakistan has turned sharply negative in the first quarter of 2026, as rising energy costs and escalating regional tensions weigh heavily on the private sector, according to the latest survey by Gallup Pakistan.
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The 17th quarterly Business Confidence Survey, conducted in April 2026 with responses from 510 businesses nationwide, indicates a broad-based decline across key indicators, including current performance, future expectations, and perceptions of the country’s overall direction.
Only 41% of businesses described their current operations as “good” or “very good,” marking a 13-percentage-point drop from the previous quarter. The net positive sentiment has fallen by 27%, reflecting a clear shift toward pessimism after earlier signs of recovery.
Future expectations appear even more concerning. While 44% of respondents expressed optimism, a larger 57% anticipate worsening conditions in the coming months. The net future confidence score declined by 25% compared to the final quarter of 2025, highlighting growing uncertainty across the business landscape.
Perceptions about Pakistan’s economic direction have also deteriorated significantly. The sentiment score dropped to -32%, compared to -8% in the previous quarter, indicating that business confidence has firmly entered negative territory.
The survey identifies inflation as the most pressing concern, cited by 37% of respondents. Meanwhile, worries about fuel and petrol prices have surged to 25%, underscoring mounting cost pressures linked to global energy trends. Energy reliability remains a persistent challenge, with 57% of businesses reporting load-shedding on the day of the survey—up 15 percentage points from the previous quarter.
Rising operational costs have emerged as the dominant risk, with 62% of businesses identifying inflation and input costs as their primary challenge. Confidence in economic governance has also weakened, as 46% of respondents believe management has worsened, compared to 33% who see improvement.
A significant factor driving negative sentiment is the impact of regional geopolitical tensions, particularly in the Middle East. Around 81% of businesses reported adverse effects stemming from these developments, mainly through higher fuel and energy prices.
The survey found that 58% of firms experienced an increase in energy expenses, while 73% reported overall cost escalation compared to the previous quarter. Looking ahead, 76% of businesses expect conditions to deteriorate further if regional instability continues over the next three months.
Commenting on the findings, Bilal I. Gilani said the simultaneous decline across all major indicators reflects a clear shift toward pessimism within the business community. He noted that external cost pressures, particularly energy shocks, are playing a central role in shaping business sentiment.
The report concludes that Pakistan’s business environment is entering a period of heightened uncertainty, driven by a combination of domestic economic challenges and external shocks. While some sectors continue to show resilience, the overall outlook points to stagnation risks in the near term.
