A recent Gallup survey has revealed that the majority of businesses in Pakistan hold a bleak outlook regarding caretaker Prime Minister Anwaar-ul-Haq Kakar’s ability to avert a potential default on the country’s international financial obligations.
In the second quarter of 2023, Gallup Pakistan conducted a survey of more than 500 businesses, with a staggering 72 percent expressing deep concerns about the looming possibility of a default.
Interestingly, these findings emerged despite Islamabad’s recent success in securing a $3 billion bailout package from the International Monetary Fund (IMF), which temporarily staved off a financial crisis.
Within the surveyed group, nearly half, or 49 percent, expressed a significantly high level of concern, while 17 percent of respondents showed no concern at all, as highlighted in the Gallup Pakistan Business Confidence Index Q2 2023 report.
The survey further revealed that, despite ongoing crises such as inflation, currency devaluation, and rising utility costs, business owners were somewhat less pessimistic about their current situations compared to the previous quarter. However, their optimism did not extend to future prospects or the overall direction of Pakistan, with persisting economic and political crises contributing to continued business insecurity.
Inflation was identified as the most pressing issue for businesses, with many hoping for government intervention to address rising prices that have eroded purchasing power. The depreciation of the Pakistani rupee and increased taxation were also cited as major concerns. Additionally, 69 percent of businesses reported facing power outages, marking a 25 percent increase from the previous quarter.
Alarming statistics also indicated that 50 percent of surveyed businesses had resorted to laying off employees due to challenging business conditions, marking a 13 percent increase from the previous quarter.
Business owners expressed overwhelmingly negative sentiments regarding both their current and future business situations, as well as the direction in which the country is heading. Although the scores in each category showed marginal improvement compared to the previous quarter, the overall trend remained negative.
Despite the economic insecurity witnessed in Pakistan throughout the year, the current business situation score on Gallup’s Business Confidence Index for the second quarter improved by two percentage points. However, when it came to future business expectations, 60 percent of business owners held a pessimistic outlook, with only 40 percent maintaining a positive view.
The Net Future Business Confidence score displayed a slight 2 percent improvement since the start of the year, yet it remained at -20 percent. An overwhelming 88 percent of business owners and managers believed that Pakistan was on the wrong path.
Notably, the report highlighted that the business community’s outlook on the future of business in Pakistan was the most pessimistic ever recorded by Gallup Pakistan. The Direction of the Country Score had decreased to -79 percent, which was four percentage points lower than the previous quarter.
Regarding pricing, half of the surveyed businesses reported increasing their output prices during the quarter under review. However, the report noted that fewer businesses raised prices compared to the previous quarter, with a relatively higher number reducing their output prices.
This survey marked the 10th installment of Gallup Pakistan’s quarterly Business Confidence Survey, which included approximately 560 businesses from across the country. The Business Confidence Index serves as a vital indicator of business sentiment and is used by policymakers worldwide.
