Largely pessimistic about the future, more of the country’s business owners now have developed a better perception of their businesses as the government of Prime Minister Shehbaz Sharif is trying to revive the cash-strapped economy.
A latest Gallup survey conducted in the first quarter this year finds that 47% of Pakistan’s businesses, especially those selling garments, commodities, stationery and gift items, perceive themselves to be in a bad or worse conditions.
This shows a three percent improvement over the previous quarter.
The current business situation score on Gallup Business Confidence Index has improved by seven percentage points to 6% in 1Q2024 from -1% in the previous quarter, noted Gallup Pakistan Survey report.
“While economic security has not fully stabilized due to the ongoing political situation, the business situation score has improved regardless,” it said.
It said while the current business score on Gallup Business Confidence Index continued to recover for the fifth straight quarter, the future business score and direction of the country score see a reversal.
Asked about their expectations for future business conditions, the businessmen were pessimistic about the future as the net future business confidence score has worsened by 16% since last quarter and now stands at 4%, according to the survey report.
The business community’s perception about the direction the country is heading in was negative as only 20% respondents said Pakistan was heading in the right direction. The direction of the country score has fallen to -60%, down 13 percentage points compared to the previous quarter.
“There is an overall decline in the future business and direction of country scores” between the third quarter of 2023 and first quarter of this year, the report observed.
Like the previous survey, inflation was the most cited problem as more than two out of four businesses would want the new government to control. The proportion of those who want the government to arrest the devaluation of the rupee has also increased.
“Political instability and taxes have taken a backseat in concern relative to the past quarter, while utility bills and business-related legislation have become more of a concern,” the report said.
Asked whether business conditions during past three months induced a decrease in the workforce, three out of 10 businesses surveyed said yes. This number shows 6% decline over the previous quarter.
Given the still backbreaking inflation and a slow economic activity in the country, businesses were asked about their sales this Ramadan and more than half of them said it had worsened. Only 18% said they are doing better.
Moreover, a majority, 73%, of the businesses surveyed do not have the hope that the newly elected government of Prime Minister Shehbaz Sharif will address the country’s business problems. Only 25% of the businesses surveyed were somewhat hopeful.
The survey reveals that while majority of businesses, 74%, did not make such complaints some service providers and manufacturers said they had to pay bribes in past six months ending March to run their businesses.
About half of the businessmen, 45%, think of the government as irrelevant for their business, while 23% look at it as a facilitator and 33% consider it a hurdle, according to the survey report.
Despite government’s claims to have reduced load-shedding, the number of businesses braving power outages has increased by seven percent to 45% this quarter compared to the previous one.
“After many quarters more businesses perceive that their current situation is better than before which is a positive news, said Bilal Ijaz Gilani, executive director at Gallup Pakistan and chief architect of the Gallup Pakistan Business Confidence Index Pakistan, in the report.
He, however, said pessimism about the country’s economic future as well as the direction of the country has deteriorated.
“Lack of certainty about both politics as well as economic policies continues to hurt the business community’s sentiment despite the fact that there is some improvement on the ground,” Gilani said.
He urged the country’s economic and political managers to pay close attention to bringing stability and continuity of policies.
Majority of businesses surveyed are not very optimistic about the new government, he said citing the latest survey results.
“Engagement and actively resolving business community issues should be therefore top priority of the federal and provincial governments,” said the executive director at Gallup Pakistan.
This latest survey is the 12th of a quarterly Business Confidence Survey that Gallup conducted across Pakistan. The Business Confidence Index is an important barometer capturing the sentiments of business community in any country and used across the world by policy makers. The survey was conducted with around 535 businesses across Pakistan.
