Pakistan’s business sentiment weakened sharply in the second quarter of 2026, with around 70–80 percent of companies delaying or revising investment plans amid rising economic uncertainty, according to the latest Business Confidence Index (BCI) survey by the Overseas Investors Chamber of Commerce and Industry (OICCI).
Conducted nationwide in Q2 2026, the survey shows the overall BCI dropping by 9 percentage points to 13 percent, down from 22 percent in the previous wave.
OICCI said the decline reflects mounting concerns over global and regional instability, particularly the ongoing Middle East conflict, which has disrupted supply chains, pushed up fuel costs and inflation, and weakened investment sentiment.
The Services sector recorded the steepest fall, with confidence down 20 points to 14 percent. Manufacturing also saw a decline of 7 points, while Retail was the only segment to improve, rising 3 points to 20 percent.
Investment activity slowed notably, with the New Investment Index falling 10 points to just 2 percent, indicating a broad pause in near-term capital spending.
The survey found that a large majority of businesses are now prioritising risk management over expansion, with firms diversifying supply chains and reassessing exposure to affected trade routes.
Expectations for the global business environment also deteriorated sharply, with the outlook index falling by 31 points. Respondents expect disruptions linked to the Middle East conflict to persist for more than six months.
OICCI Secretary General M. Abdul Aleem said the findings reflect an increasingly challenging operating environment.
He noted that while Pakistan’s underlying market fundamentals remain intact, restoring confidence will require policy stability, inflation control and measures to reduce the impact of geopolitical uncertainty.
Looking ahead, 34 percent of respondents expect business conditions to worsen over the next six months, up from 22 percent previously. Inflation, political instability and fuel prices were cited as the top concerns.
Long-term challenges remain persistent, with 84 percent identifying inflation as the biggest threat, followed by high taxation at 79 percent. Currency instability and inconsistent policies were also highlighted by 61 percent of respondents.
Despite the overall decline, confidence among OICCI member companies—representing major foreign investors—edged up to 28 percent.
Regionally, confidence in major cities fell by 12 points to 11 percent, while non-metropolitan cities including Multan, Peshawar, Quetta, Rawalpindi, Sialkot and Sukkur saw a modest 3-point rise to 22 percent.
The survey also noted growing interest in generative AI adoption, with firms increasing preparedness for integration across operations, technology systems and workforce planning, signalling longer-term investment intent despite short-term caution.
The OICCI Business Confidence Index is conducted twice a year and covers businesses representing around 80 percent of Pakistan’s GDP.
