According to the latest survey, the present government is repeatedly termed as the “worst” manager of the economy; the country’s business owners have become more pessimistic about their future because of continued political turmoil and the new tax-heavy budget. The values were negative for all three strands as Gallup Pakistan surveyed the owners of 454 small, medium and large businesses from more than 30 districts in the second quarter of 2024 to compile its Gallup Business Confidence Index report.
The survey reports that the index score for the country’s current business situation, future business situation, and direction declined by four to 10%. Many businesses thought the government’s new financial plan for FY25 was not business-friendly, while about two in five firms see inflation as their biggest problem. Like in the first quarter, a price hike was the most cited problem that almost two out of five businessmen, 37%, would like the government to address. Inflation, which soared to 12.6% in June, remains high and continues to erode consumers’ purchasing power.
According to the survey, more than half, 54%, of Pakistan’s businesses think that the current Pakistan Muslim League-Nawaz government is worse than the previous government in managing the economy.
“Owing to continued political uncertainty and the recently announced heavy-on-taxation federal and provincial budgets have had a significant impact on business optimism in the country,” said Bilal Ijaz Gilani, an executive director at Gallup Pakistan and chief architect of Gallup Pakistan Business Confidence Index. He said the business community, which is already burdened with various regulatory measures and taxes through direct and indirect means, expressed serious reservations about the new budget while being surveyed.
The number of businesses which want the government to solve their taxation issues has risen considerably from the first quarter because of the increased taxes the government imposed in the federal budget last month.
Six out of 10 businesses surveyed said they were faced with crippling load-shedding. This quarter, 16% more businesses said the power outages had increased due to the country’s heavy load on power infrastructure in summer. Overall, 39% of surveyed companies said no to load-shedding, while 61% said yes.
Asked how well their businesses were doing, the owners and managers said the national and global challenges had made economic security a distant dream in Pakistan. Resultantly, the net current business situation score saw a fall of 16% in the second quarter of 2024.
The businesses appeared more pessimistic about the future, as 57% expressed negative expectations, while only 43% expected things to improve. The net future business confidence score has worsened by 36% since the last quarter and is now at -14%.
Pessimistic expectations for future business conditions were prevalent, especially among those selling hardware and tools, electrical items, and manufacturing products. The businesses selling home decor and accessories, gift items like toys and sports-related items, and cosmetics were among the most optimistic.
The net direction of the country score also moved southward to -64%, worsening by four percentage points from the previous quarter, as the overall trend for the past few quarters has been consistently negative. “Only 18% of respondents claimed that the country is heading in the right direction,” the report said.
A majority, 54%, of business people said the current economic managers from the PML-N government were worse than their counterparts in the previous government in terms of financial management. Twenty-three per cent of respondents from the manufacturing sector thought the current and previous governments were the same.
A sweeping majority of businessmen, 85%, do not consider the government’s new financial plan a “good budget”, the survey said. Eleven per cent of the manufacturers and 15% of service providers said the budget was business-friendly. Because of high inflation and poor business conditions, nine per cent more employers, especially manufacturers, had to decrease their workforce in the second quarter. Six out of 10 businesses, or 60%, said their sales were worse this year. More manufacturers (66%) reported worse sales than service providers (58%).
“Governments in Pakistan need to listen and address the voice of business communities across Pakistan,” said Gilani.
