Pakistan’s Business Confidence Rebounds in Q2, but Budget Concerns Persist: Gallup Survey

Business confidence in Pakistan recovered during the second quarter of 2026, with companies reporting improved current conditions and stronger expectations for the year ahead, according to the latest Business Confidence Index released by Gallup Pakistan.

The survey, conducted from July 2 to 7 among 527 businesses across manufacturing, services, construction, financial services, and wholesale and retail trade, showed improvement across all three major components of the index.

The Current Business Conditions score improved by nine percentage points to negative 10%, compared with negative 19% in the first quarter of 2026. Around 45% of businesses described current conditions as good, up four percentage points from the previous quarter.

The strongest improvement was recorded in the Future Business Conditions score, which rose by 25 percentage points to positive 12%, turning positive for the first time in three quarters. Fifty-six percent of respondents said they expected business conditions to improve over the next 12 months. The Direction of the Country score also improved by 12 percentage points to negative 20%, although it remained in negative territory.

Gallup Pakistan said part of the improvement in sentiment appeared to be linked to easing external uncertainty following the resolution of the Iran-US conflict and a subsequent decline in fuel prices ahead of the survey period.

There is no doubt there is recovery in business confidence in the country; however, indicators remain in the negative despite this recovery, said Bilal I. Gilani, Executive Director of Gallup Pakistan.

Despite the improved sentiment, businesses continued to face significant operational pressures. Inflation remained the most frequently cited issue, identified by 34% of respondents as the key problem they wanted the government to address. Loadshedding also worsened, with 72% of businesses reporting power outages on the day of the survey, up 15 percentage points from the previous quarter and higher than levels recorded in 2023 and 2024.

Business views regarding the Federal Budget 2026–27 remained largely negative. Thirty-nine percent of respondents rated the budget negatively, compared with 18% who viewed it positively. Nearly half of the surveyed businesses, or 49%, said they had low confidence in their prospects over the next 12 months in light of the budget, while 36% expressed confidence.

Similarly, 49% expected the budget to increase the cost of doing business, compared with 22% who anticipated a reduction. On investment intentions, 34% said the budget made them less likely to invest or expand, while only 22% said they were more likely to do so.

Gallup Pakistan said the budget-related findings were particularly significant, as all four measures remained net negative despite the broader recovery in business confidence. The recovery in sentiment hasn’t extended to the budget, Gilani said. Businesses are feeling somewhat better about where things stand and where they are headed, but they do not yet trust that fiscal policy is working in their favour.

Gallup Pakistan said a sustained improvement in inflation, energy supply and operating costs would be necessary before the latest recovery could be regarded as a durable turning point. The Gallup Pakistan Business Confidence Index has tracked business sentiment since the second quarter of 2020. The latest survey covered businesses across 40 districts and cities in all four provinces, Azad Jammu and Kashmir, and Malakand.