The Overseas Investors Chamber of Commerce and Industry (OICCI) has reported a significant decline in business confidence across Pakistan during the second quarter of 2026.
Ongoing conflict in the Middle East is a major factor weighing on investor sentiment, supply chains, and economic prospects.
According to the findings of the Business Confidence Index (BCI) Survey Wave 29, the overall confidence level dropped by nine percentage points to a positive 13pc, compared to 22pc recorded in the previous survey wave.
The downturn was largely attributed to mounting inflation, higher fuel prices, and growing economic uncertainty linked to the regional conflict. Among the sectors surveyed, services recorded the steepest fall, declining by 20 points to 14pc, while the manufacturing sector slipped by seven points. In contrast, the retail sector posted a modest improvement of three points, reaching positive 20pc.
The survey also highlighted a sharp decline in investment appetite, with the New Investment Index plunging by 10 points to only 2pc, indicating that businesses are largely holding back on fresh capital spending in the near term.
Around 70pc to 80pc of companies across various sectors said they were either delaying or reassessing investment plans while also attempting to diversify supply chains to minimise exposure to disrupted trade routes. Businesses are increasingly prioritising operational resilience and risk management strategies.
OICCI Secretary General M. Abdul Aleem said the latest survey reflected the growing challenges faced by businesses operating in Pakistan.
“The impact of the Middle East conflict is spreading across all sectors, from halted investments to restructuring of supply chains,” he said, adding that restoring confidence would require stable policies, relief from rising costs, and measures to protect the economy from prolonged geopolitical uncertainty.
The survey showed that 34pc of respondents expect business conditions to worsen over the next six months, compared to 22pc in the previous survey. Political instability, rising fuel prices, and inflation emerged as the key concerns for businesses.
Inflation was identified as the most serious structural threat to business growth by 84pc of respondents, followed by high taxation at 79pc. Currency instability and inconsistent government policies were each cited by 61pc of participants.
Despite the broader slowdown, business confidence among OICCI member companies, which represent some of Pakistan’s largest foreign investors, remained relatively stable and improved slightly to positive 28pc.
Regionally, confidence levels in metropolitan areas fell by 12 points to 11pc, while non-metropolitan cities including Peshawar, Quetta, Rawalpindi, Multan, Sialkot, and Sukkur registered a modest three-point rise to 22pc.
The survey also pointed to growing interest in generative artificial intelligence technologies, particularly among OICCI member companies, which showed greater readiness for integrating AI into business operations, technology systems, and workforce development initiatives.
Conducted twice annually, the OICCI Business Confidence Survey includes responses from businesses representing nearly 80pc of Pakistan’s GDP.
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