The never-ending political turmoil and uncertainty in the country have disillusioned entrepreneurs increasingly about the prospects of their businesses. According to a Gallup Pakistan survey conducted in the last quarter of 2022 for the Gallup Business Confidence Index, 65 percent of business owners believe their businesses are struggling.
While the fact that business confidence is low does not entirely come as a surprise, the extent to which it has dropped in recent times is interesting to note. Findings of the survey show the Net Future Business Confidence score has worsened by 50 percent since the beginning of 2022 and is now at -10 percent. The persistent political instability witnessed this year in addition to the devastating floods are perhaps the most major influencing factors, and what is concerning is the fact that the index values are the worst since Gallup started the project in 2019, which includes Covid-19 times.
The situation is bleak as cloth and garment shops are experiencing the worst levels of confidence, with 81 percent of them saying business conditions are not conducive. Further, less than five percent of businesses in Punjab, Sindh, and Khyber-Pakhtunkhwa (KP) believe that the country is headed in the right direction.
Similar to the results of the survey conducted during the first quarter of 2022, inflation remains the most cited problem by businesses, which is then followed by issues such as persistent loadshedding, energy prices, shortage of customers, and high taxes.
Of course, there are some issues that the government cannot do much about such as energy prices because of the stipulations of the IMF programme. However, other confidence-building measures can be instituted which are already known to the government, and these must be pursued on an urgent basis to prevent the issues from compounding further.
The business community is awaiting strong and decisive steps from the government. The first step would be to instill some semblance of stability in the political system, and then the government should sit with all the concerned stakeholders to understand their concerns and grievances and come up with a comprehensive plan to restore the confidence and outlook of the business sector.