Pakistan’s Businesses in Peril: Gallup Survey Uncovers Grave Concerns

The days of worries are far from over for the deteriorating economy of Pakistan. It was evident in a recent Gallup survey which showed that most businesses have shown deep concerns regarding the country’s ability to avoid a potential default on its international obligations. The fear of default still persists despite the IMF granting a bailout package of $3 billion.

It is pertinent to mention here that the survey was carried out in the Q2 of 2023 by Gallup Pakistan, and included over 500 businesses across the country. According to Gallup, an alarming 72% of respondents expressed grave concerns, and 17% showed no concern at all regarding Pakistan’s potential default.

Astonishingly, the survey also indicated that the business community was comparatively less pessimistic about the fate of their businesses compared to the previous quarter, despite the ongoing crises, rising inflation, and surging power costs. The factors that significantly added to the concerns of business owners include Inflation, utility bills, and rupee devaluation.

Nevertheless, a prevalent sense of pessimism continues to dominate the perspectives of business owners regarding the future prospects and the general trajectory of the country. The survey highlights a sustained atmosphere of uncertainty among businesses, stemming from ongoing economic and political turmoil.

Notably, the unyielding inflation rate stands out as the most significant concern, as business owners emphasize the urgency for the interim government to tackle this issue. Inflation not only diminishes people’s purchasing power but also sustains historically high-interest rates.

The devaluation of the Pakistani rupee and the introduction of taxes are other primary issues. Furthermore, the survey brings to light a noteworthy 25% rise in businesses experiencing load-shedding during the quarter, with 69% of them confirming power disruptions. A particularly distressing revelation is that half of the surveyed businesses indicated they had to downsize their workforce due to the tough business environment, marking a 13% increase compared to the previous quarter.

It’s worth noting that despite the prevailing economic uncertainty, Gallup’s Business Confidence Index for the second quarter showed a two-percentage-point improvement in the assessment of the current business situation. However, it’s important to emphasize that this improvement did not outweigh the overall negative sentiment.

Worries about the future were equally prominent, with 60% of respondents expressing pessimistic outlooks for their businesses. Conversely, only 40% maintained optimistic perspectives, resulting in a Net Future Business Confidence score of -20%. This represents a modest 2% improvement since the start of the year.

Continuing a persistently bleak outlook, a staggering 88% of business owners and managers shared the belief that Pakistan was on an unfavorable trajectory, a sentiment consistent with previous quarters. The Direction of the Country Score declined to -79%, marking a decrease of four percentage points compared to the previous quarter.

This survey is the 10th edition of a quarterly Business Confidence Survey conducted by Gallup Pakistan, aimed at capturing the sentiments of the business community in the country. The Business Confidence Index, used by policymakers worldwide, underlines the challenges and concerns of Pakistan’s business sector. The survey involved approximately 560 businesses from across Pakistan.

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