Despite widespread pessimism about their ongoing prospects, business owners in the country are experiencing a surge in confidence, with expectations for a better future rising by 42% from the previous quarter, as indicated by the latest survey.
According to the Gallup Pakistan Survey, conducted with business owners in the third quarter of 2023 for the Gallup Business Confidence Index report, a smaller percentage of business owners are now pessimistic about future conditions and the direction of the country compared to the second quarter. The survey highlights that business insecurity persists due to prevailing economic and political crises, but businesses are showing greater optimism about their future.
The report acknowledges that inflation, utility bills, and political instability continue to cause growing concern among the business community. However, it notes that overall, fewer businesses express hopelessness compared to the previous quarter.
When asked about their expectations for future business conditions, businesses surprisingly displayed optimism, with 61% expressing positive expectations, while 38% anticipate things to worsen. The net future business confidence score has improved by 42% since the spring, reaching 22%, according to the survey report.
The survey reveals that businessmen’s perceptions about the direction of the country have also improved since the previous two quarters, with 26% of respondents stating that Pakistan is heading in the right direction. The Direction of the Country score has increased to -47%, which is 30 percentage points more than a quarter ago.
Despite overall low confidence in the business community since economic crises began in 2022, the report notes that economic insecurity in the country has worsened since the beginning of this year. Nevertheless, the business situation score has improved by 25 percentage points.
Similar to the second quarter survey results, inflation remains the most cited problem by most businesses, with three out of 10 expressing a desire for the government to address the issue of price hikes. Political instability has gained more attention in the third quarter compared to the previous one.
While concerns about the devaluation of the rupee and fuel prices have lessened, businesses are now more concerned about taxes and load-shedding in the country. When asked whether business conditions led to layoffs in the quarter under review, four out of 10 businesses surveyed replied in the affirmative, reporting a workforce reduction of 11% from the last quarter.
More than half of the businesses surveyed reported an increase in output prices this quarter. The survey reveals that more businesses raised output prices compared to the last quarter, and comparatively fewer businesses reduced their output prices in this quarter.
Regarding expectations from the caretaker government of Prime Minister Anwaar-ul-Haq Kakar, 73% of businessmen did not express hope that the government will address the problems of the country’s businesses. Twenty-five percent of them were somewhat hopeful. When questioned about power outages, 38% of the businesses reported experiencing load-shedding this quarter, showing a decline of 31% compared to the last quarter.
Bilal Ijaz Gilani, executive director at Gallup Pakistan and chief architect of the Gallup Pakistan Business Confidence Index Pakistan, emphasized that this quarterly report brings positive news about improving business sentiment in the country. Both current and future business confidence is on an upward trajectory, and there is a significant improvement in the business community’s view regarding the direction of the country.
Gilani expressed hope that the current positive momentum in various indicators, including the stock exchange index, improved current account deficit, positive outcomes of IMF loan tranches, and relative consistency in policy, will continue in the coming quarter.
The latest survey is the 11th in a series of quarterly Business Confidence Surveys conducted by Gallup Pakistan across the country. The Business Confidence Index is a crucial indicator capturing the sentiments of the business community and is used worldwide by policymakers. The survey involved around 530 businesses across Pakistan.
In summary, the survey indicates a notable shift in the sentiments of business owners in Pakistan, with a significant increase in confidence despite ongoing economic challenges. This positive trend is attributed to improving indicators and expectations for the future, highlighting the resilience and adaptability of the business community in the face of adversity.
