Pakistan’s business confidence slipped in the final quarter of 2025, reflecting the challenges posed by intensifying inflation and persistent power supply disruptions. The findings were published in Gallup Pakistan’s latest Business Confidence Index, which tracks nationwide business sentiment through periodic survey waves. While confidence declined compared to mid-year readings, the overall sentiment still remains stronger than it was at the same time in 2024, indicating that despite ongoing economic pressures, businesses see a comparatively more stable environment than they did last year.
The data is drawn from the 16th wave of Gallup’s survey, conducted with 571 businesses across different sectors and geographical regions. According to the report, current business conditions dropped sharply to +8 percent, down from +20 percent recorded in the second quarter of 2025. This marks one of the steepest declines seen during the year and highlights how rising operational costs and electricity issues are influencing day-to-day business assessments.
Expectations for business activity over the coming months also weakened. Future outlook declined from +22 percent in Q2 to +12 percent in Q4, demonstrating reduced optimism about the near-term operating environment. Uncertainty surrounding energy prices, high input costs and slower market demand played a significant role in tempering expectations.
Perceptions of the country’s overall direction also painted a more cautious picture. The index showed a drop to –8 percent compared with –2 percent in the previous survey wave, reflecting that more businesses believe the country is heading in an unfavorable direction. This sentiment is partly influenced by macroeconomic volatility and the lingering ripple effects of global market trends.
Inflation surfaced as the most pressing concern for businesses, with 33 percent of respondents urging policymakers to prioritize price stability. Many businesses reported difficulty managing rising costs after renewed increases in food and energy prices. Firms highlighted that inflation continues to cut into profitability, complicate procurement planning and weaken consumer demand. The pressure is particularly high for small and medium-sized enterprises that operate on tighter margins.
One of the most striking insights was the persistence of power-related challenges. Despite considerable investments in Pakistan’s power sector in recent years, 42 percent of surveyed firms reported experiencing load-shedding on the day of the interview, a proportion almost identical to the levels recorded a year earlier. The continuity of this challenge limits industrial productivity and affects the reliability of supply chains.
The survey also explored business perceptions of political management. According to the results, 46 percent of respondents rated the current PML-N government’s economic performance as better than that of the previous PTI administration. This rating remained consistent with the previous quarter and showed a slight improvement compared to sentiment recorded a year earlier. While businesses note areas of improvement, concerns remain about the pace of reforms and the overall direction of economic policy.
Gallup Pakistan pointed out that even though sentiment has softened considerably since mid-2025, confidence levels are still above those recorded through most of 2022 and 2023. This suggests that while businesses are wary of short-term challenges, the medium-term outlook retains a measure of stability and resilience. However, the organization emphasized that stabilization alone cannot drive sustained economic recovery. Without more robust growth, stronger reforms and consistent policy execution, short-term stability may not translate into long-term progress.
The survey results highlight an economy that is navigating a delicate balance. While lingering concerns around inflation and energy reliability continue to weigh on sentiment, the improvement over last year’s levels signals that businesses still perceive some signs of underlying economic stabilization. How the government responds to these structural challenges over the coming quarters will likely shape business confidence heading into 2026.
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