Although largely pessimistic about the future, more of the country’s business owners now have developed a better perception of their businesses as Prime Minister Shehbaz Sharif’s government tries to revive the cash-strapped economy. A latest Gallup survey conducted in the first quarter of this year finds that 47% of Pakistan’s businesses, especially those selling garments, commodities, stationery, and gift items, perceive themselves to be in bad or worse conditions. This is a three percent improvement over the previous quarter.

The current business situation score on the Gallup Business Confidence Index has improved by seven percentage points to 6% in 1Q2024 from -1% in the previous quarter, noted the 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 that while the current business score on the Gallup Business Confidence Index continued to recover for the fifth straight quarter, the future business score and direction of the country score saw 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 of the direction the country is heading was negative, as only 20% of 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 the first quarter of this year.

Like the previous survey, inflation was the most cited problem, as more than two 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.

When asked whether business conditions during the past three months induced a decrease in the workforce, three out of 10 businesses surveyed said yes. This number shows a 6% decline over the previous quarter.

Given the still-backbreaking inflation and slow economic activity in the country, businesses were asked about their sales this Ramadan, and more than half of them said they had worsened. Only 18% said they were doing better.

Moreover, a majority, 73%, of the businesses surveyed do not hope that Prime Minister Shehbaz Sharif’s newly elected government will address the country’s business problems. Only 25% of the businesses surveyed were somewhat hopeful.

The survey reveals that while the majority of businesses, 74%, did not make such complaints, some service providers and manufacturers said they had to pay bribes in the past six months ending March to run their businesses.

According to the survey report, about half of the businessmen, 45%, think of the government as irrelevant to their business, while 23% see it as a facilitator and 33% consider it a hurdle.

Despite the government’s claims to have reduced load-shedding, the number of businesses braving power outages has increased by seven percent to 45 percent this quarter compared to the previous one.

“After many quarters, more businesses perceive that their current situation is better than before, which is 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 and direction has deteriorated. “Lack of certainty about politics and economic policies continues to hurt the business community’s sentiment despite some improvement on the ground,” Gilani said.

He urged the country’s economic and political managers to pay close attention to ensuring policy stability and continuity.

He said, citing the latest survey results, that the majority of businesses surveyed are not very optimistic about the new government.

“Engagement and actively resolving business community issues should, therefore, be the top priority of the federal and provincial governments,” said the executive director of 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 the business community in any country and is used worldwide by policy makers. The survey was conducted with around 535 businesses across Pakistan.