Karachi, Despite ongoing economic and political challenges, a sense of optimism is emerging among business owners in Karachi. The Gallup Pakistan Survey revealed a 42% increase in business owners’ expectations for a better future compared to the previous quarter, signaling a shift in sentiment towards positive prospects.
According to Gallup Pakistan, the survey conducted in the third quarter of 2023 for the Gallup Business Confidence Index report found that while businesses continue to face insecurity due to the economic and political crises, their outlook for the future is becoming more positive. Fewer business owners now express pessimism about future conditions and the country’s direction compared to the second quarter.
The survey highlighted that inflation, high utility bills, and political instability remain major concerns for the business community. However, the overall sense of hopelessness among businesses has decreased compared to the previous quarter. When asked about their expectations for future business conditions, 61% of the businesses surveyed were optimistic, while 38% expected conditions to worsen. The net future business confidence score has improved significantly, now standing at 22%.
Business owners’ perceptions about the direction of the country have also improved, with 26% believing that Pakistan is heading in the right direction. The Direction of the Country score increased to -47%, a 30 percentage point improvement from the previous quarter.
Despite these positive signs, the overall confidence of the business community remains subdued due to the ongoing economic crises that have been looming since 2022. The economic insecurity in the country has worsened since the beginning of the year, but the business situation score has improved by 25 percentage points.
Inflation continues to be the most cited problem by businesses, with three out of ten wanting the government to address the issue of price hikes. Concerns about political instability have increased in the third quarter, while worries about the devaluation of the rupee and fuel prices have become relatively less pressing. However, taxes and load-shedding have emerged as new areas of concern.
Regarding employment, four out of ten businesses surveyed indicated workforce reductions, with an average shrinkage of 11% from the last quarter. Over half of the businesses reported increasing their output prices this quarter.
The survey also revealed that a majority of businessmen, 73%, did not expect the caretaker government of Prime Minister Anwaar-ul-Haq Kakar to address the problems of the country’s businesses, while 25% were somewhat hopeful. Load-shedding incidents showed a decline of 31% over the last quarter.
Bilal Ijaz Gilani, executive director at Gallup Pakistan and chief architect of the Gallup Pakistan Business Confidence Index, noted that the business sentiment in the country is improving after a consistent decline. Both current and future business confidence is on an upward trajectory, and there is significant improvement in the business community’s view regarding the direction of the country.
Gilani expressed hope that positive trends in other indicators, such as the stock exchange index, improved current account deficit, outcomes of IMF loan tranches, and consistent policy measures, would continue to bolster business sentiment in the coming quarter. This latest survey is the 11th in a series of quarterly Business Confidence Surveys conducted by Gallup Pakistan, involving around 530 businesses across Pakistan.