Business confidence in Pakistan improved across the board during the second quarter of 2026, with companies reporting better current conditions and a markedly brighter outlook for the year ahead, according to the latest Business Confidence Index released by Gallup Pakistan.
The survey, conducted between July 2 and 7 among 527 businesses spanning manufacturing, services, construction, financial services, and wholesale and retail trade, showed gains across all three components of the index.
The Current Business Conditions score improved to negative 10 percent from negative 19 percent in the previous quarter. The Future Business Conditions score surged 25 percentage points to positive 12 percent, turning positive for the first time in three quarters. The Direction of the Country score also improved, rising 12 percentage points, but remained in negative territory at negative 20 percent.
Around 56 percent of businesses said they expect conditions to improve over the next 12 months, while 45 percent described current business conditions as good.
Gallup Pakistan attributed the improvement in sentiment partly to easing geopolitical uncertainty following the resolution of the Iran-US conflict and lower fuel prices ahead of the survey period.
Inflation and Power Outages Weigh on Recovery
Despite the brighter outlook, businesses continued to grapple with significant operational challenges. Inflation remained the top concern, cited by 34 percent of respondents. Meanwhile, 72 percent of businesses reported experiencing electricity outages on the day of the survey, a sharp increase from the previous quarter.
Budget Fails to Inspire Confidence
The survey also revealed deep skepticism toward the Federal Budget 2026-27. Thirty-nine percent of respondents rated the budget negatively, compared with just 18 percent who viewed it positively. Nearly half said the budget had reduced their confidence in business prospects, while 49 percent expected it to increase the cost of doing business. A further 34 percent said the budget had made them less likely to invest or expand.
Gallup Pakistan Executive Director Bilal I. Gilani said the recovery in business sentiment had not translated into confidence in fiscal policy. He added that sustained improvements in inflation, energy supply, and operating costs would be needed before the recovery could become durable.
