LAHORE: Pakistan’s private sector confidence has deteriorated sharply in the first quarter of 2026, with a majority of businesses reporting worsening conditions amid rising energy costs and spillover effects of regional geopolitical tensions, according to a survey released by Gallup Pakistan.
The 17th quarterly Gallup Business Confidence Survey, conducted in April 2026, based on responses from 510 businesses across the country, shows a broad-based decline across all key indicators — current performance, future expectations and perception of national direction.
As per the survey report, only 41 per cent of the businesses described their current operations as “good” or “very good,” reflecting a 13 percentage point drop from the previous quarter. The net proportion of firms reporting positive conditions has fallen by 27pc, indicating a clear shift toward pessimism after earlier gains.
The report says the outlook for the coming months appears even weaker. While 44pc of respondents expressed optimism about future performance, a larger 57pc expect conditions to worsen. The net future confidence score has declined by 25pc compared to Q4 2025, pointing to growing uncertainty and weakening business momentum.
Mentions rising energy costs and Middle East situation among major factors
Perceptions regarding the country’s overall direction also deteriorated significantly, with the score dropping to -32pc from -8pc in the previous quarter, it mentions.
The survey report observes that sentiment has firmly entered negative territory, reflecting heightened concern among businesses about the broader economic trajectory.
Structural challenges continue to weigh heavily on the private sector. Inflation remains the top concern, cited by 37pc of businesses, while concerns over fuel and petrol prices surged to 25pc, highlighting intensifying cost pressures.
Energy reliability remains another major issue, with 57pc of firms reporting loadshedding on the day of the survey, a 15 percentage point increase from the previous quarter.
It mentions that rising costs have emerged as the dominant operational risk, with 62pc of businesses identifying inflation and input costs as their biggest challenge.
The Gallup survey also shows declining confidence in economic management, as 46pc of respondents believe governance has worsened, compared to 33pc who see improvement.
A key feature of the latest Gallup survey is the strong impact of regional developments, particularly tensions in the Middle East. It says around 81pc of businesses reported negative effects linked to these developments, primarily through rising fuel and energy costs.
The survey shows nearly 58pc of firms said their energy expenses had increased, while 73pc reported overall cost escalation compared to the previous quarter.
Looking ahead, 76pc of businesses expect conditions to deteriorate further if regional instability persists over the next three months, it says.
The report concludes that Pakistan’s business environment is facing a period of heightened uncertainty, driven by a combination of domestic economic pressures and external shocks. While some sectors continue to show resilience, the overall trajectory suggests stagnation risks in the near term.
“The simultaneous decline across all major indicators signals a clear shift toward pessimism within the business community, with external cost pressures playing a central role in shaping sentiment,” comments Bilal I Gilani, executive director at Gallup Pakistan.
Published in Dawn, April 24th, 2026
