Current business situation score on Gallup Business Confidence Index improves

ISLAMABAD  -  Largely pessimistic about the future, more of the country’s business owners now have de­veloped a better perception of their businesses as the govern­ment of Prime Minister Sheh­baz Sharif is trying to revive the cash-strapped economy. A lat­est Gallup survey conducted in the first quarter this year finds that 47% of Pakistan’s busi­nesses, especially those selling garments, commodities, statio­nery and gift items, perceive themselves to be in a bad or worse conditions. This shows a three percent improvement over the previous quarter. 

The current business situa­tion score on Gallup Business Confidence Index has improved by seven percentage points to 6% in 1Q2024 from -1% in the previous quarter, noted Gallup Pakistan Survey report. “While economic security has not fully stabilized due to the ongoing political situation, the business situation score has improved regardless,” it said. It said while the current business score on Gallup Business Confidence In­dex continued to recover for the fifth straight quarter, the future business score and direction of the country score see a reversal. Asked about their expectations for future business conditions, the businessmen were pessimis­tic about the future as the net fu­ture business confidence score has worsened by 16% since last quarter and now stands at 4%, according to the survey report.

The business community’s perception about the direction the country is heading in was negative as only 20% respon­dents said Pakistan was heading in the right direction. The direc­tion of the country score has fall­en to -60%, down 13 percentage points compared to the previous quarter. “There is an overall de­cline in the future business and direction of country scores” be­tween the third quarter of 2023 and first quarter of this year, the report observed. Like the previous survey, inflation was the most cited problem as more than two out of four businesses would want the new govern­ment to control. The proportion of those who want the govern­ment to arrest the devaluation of the rupee has also increased.

“Political instability and taxes have taken a backseat in con­cern relative to the past quarter, while utility bills and business-related legislation have become more of a concern,” the report said. Asked whether business conditions during past three months induced a decrease in the workforce, three out of 10 businesses surveyed said yes. This number shows 6% decline over the previous quarter.

Given the still backbreaking inflation and a slow economic ac­tivity in the country, businesses were asked about their sales this Ramazan and more than half of them said it had worsened. Only 18% said they are doing better. Moreover, a majority, 73%, of the businesses surveyed do not have the hope that the newly elected government of Prime Minister Shehbaz Sharif will address the country’s busi­ness problems. Only 25% of the businesses surveyed were somewhat hopeful. The survey reveals that while majority of businesses, 74%, did not make such complaints some service providers and manufacturers said they had to pay bribes in past six months ending March to run their businesses.

About half of the business­men, 45%, think of the gov­ernment as irrelevant for their business, while 23% look at it as a facilitator and 33% consid­er it a hurdle, according to the survey report. Despite govern­ment’s claims to have reduced loadshedding, the number of businesses braving power out­ages has increased by seven percent to 45% this quarter compared to the previous one.

“After many quarters more businesses perceive that their current situation is better than before which is a positive news, said Bilal Ijaz Gilani, executive director at Gallup Pakistan and chief architect of the Gallup Pakistan Business Confidence Index Pakistan, in the report. He, however, said pessimism about the country’s economic future as well as the direction of the country has deteriorated.

“Lack of certainty about both politics as well as economic policies continues to hurt the business community’s senti­ment despite the fact that there is some improvement on the ground,” Gilani said. He urged the country’s economic and po­litical managers to pay close at­tention to bringing stability and continuity of policies.

Majority of businesses sur­veyed are not very optimistic about the new government, he said citing the latest survey re­sults. “Engagement and actively resolving business community issues should be therefore top priority of the federal and pro­vincial governments,” said the executive director at Gallup Pakistan. This latest survey is the 12th of a quarterly Business Confidence Survey that Gallup conducted across Pakistan. The Business Confidence Index is an important barometer captur­ing the sentiments of business community in any country and used across the world by policy makers. The survey was con­ducted with around 535 busi­nesses across Pakistan.