KARACHI: The majority of Pakistan’s businesses are “not hopeful at all” about the ability of caretaker Prime Minister Anwaar-ul-Haq Kakar to save the country from a potential default on its international financial obligations, according to a latest survey.
The 72% of more than 500 businesses surveyed in the second quarter of 2023 by Gallup Pakistan were found concerned over the country’s potential default.
The survey results come despite Pakistan’s success in securing a $3 billion bailout package from the International Monetary Fund (IMF) that helped dollar-deficient Pakistan avoid a possible default.
Of the total, nearly half, 49%, expressed significantly high concern, while 17% of respondents were not concerned at all, according to the Gallup Pakistan Business Confidence Index Q2 2023 report.
However, the survey revealed that the business fraternity was less doubtful about the fate of their businesses than in the last quarter despite increasing crises, deteriorating inflation, and rising energy costs.
“Inflation, utility bills, and rupee devaluation cause growing concern among the business community, but overall, fewer businesses express hopelessness than the previous quarter,” the survey report said.
Less pessimistic about the ongoing conditions, businessmen are largely pessimistic about future prospects and the direction that the country is heading. “Prevailing political and economic crises have contributed to continuing business insecurity,” it said.
The backbreaking inflation was cited as the most important problem the businessmen would want the caretaker government to solve, as price hike has significantly eroded people’s purchasing power besides keeping the interest rate at a record high in recent months.
Challenges for Businesses in Pakistan
The freefall of the Pakistani rupee and the imposition of additional taxes were other problems most of the businesses wanted the federal government to address. The number of businesses facing load-shedding rose by 25% this quarter, as 69% said yes when asked if they were braving power outages.
Half of the businesses surveyed said they had laid off their employees because of tough business conditions in the quarter under review, showing a 13% increase over the previous quarter.
Asked questions about their current and future business situation as well as the direction of the country, the businessmen’s view on all three fronts was negative.
However, the scores in each strand rose by a few percentage points compared to the last quarter.
“While the overall negative trend continues, this shows a marginal improvement in business confidence after first quarter,” the report revealed.
The current business situation score on Gallup’s second quarter Business Confidence Index has improved by two percentage points, regardless of the fact that economic insecurity has risen in Pakistan since the start of the year.
The business owners were equally pessimistic about the future of their businesses, as 60% expressed negative expectations this quarter. Only 40% are upbeat that things will improve.
The survey shows that the Net Future Business Confidence score has improved by 2% since the beginning of the year and is now at -20%.
Like past two quarters, 88% of business owners and managers think that Pakistan is heading in the wrong direction.
“The business community’s assessment about future business in Pakistan is the largely pessimistic since Gallup Pakistan begun recording this indicator,” the report stated, adding that the Direction of the Country Score has reduced to -79 percent, four percentage points less than last quarter.
Half of the businesses surveyed opined they had increased their production prices during the quarter under review.
“Fewer businesses raised prices compared to first quarter, and comparatively more businesses reduced their production prices,” the report said.
This latest survey is the 10th of a quarterly Business Confidence Survey that Gallup Pakistan conducted nationwide. The Business Confidence Index is an important barometer capturing the sentiments of the business community in any country and is used worldwide by policymakers. The survey was conducted with around 560 businesses across Pakistan.
