LAHORE: Business confidence in the government’s handling of the economy has improved notably over the past year, with a growing number of firms viewing the PML-N administration as performing better than its predecessor, according to Gallup Pakistan’s Q2 2025 Business Confidence Survey.

The survey, conducted from July 23 to 27 and covering 524 businesses across manufacturing, services, and trade sectors, found that 46pc of respondents viewed the current government’s economic management more favourably than that of the previous PTI-led administration, compared to just 24pc a year earlier.

Despite this shift, firms continued to highlight inflation, high energy costs, and taxation as the most pressing issues. Structural challenges, such as energy insecurity and the informal sector’s lack of support, also persist.

Gallup’s “Direction of the Country” score improved significantly, standing at -2pc — its highest level since Q4 2021. While still slightly negative, the score reflects reduced political and economic uncertainty from the perspective of the business community.

46pc of businesses rate govt’s economic management better than PTI’s, up from 24pc last year

Bilal Ijaz Gilani, Executive Director of Gallup Pakistan, described the findings as indicating a “cautiously improving mood” among private sector actors. “The most visible change is in the perception of the country’s direction and greater trust in the government’s economic handling. However, sustained progress will depend on policy consistency, institutional responsiveness, and reforms,” he said.

Business performance also improved modestly, with 61pc of respondents describing their current operations as “good” or “very good,” a six-percentage-point increase from the previous survey. Gains were most notable in the services and trade sectors, while the manufacturing sector showed slower recovery.

Forward-looking confidence was less robust, with 61pc of businesses optimistic about the coming months, and the Future Business Confidence score rising by only one percentage point. The survey notes this suggests businesses expect conditions to hold steady rather than improve significantly.

Consumer inflation, though down to 0.3pc in April from 38pc in May 2023, remains the top concern for 28pc of respondents. High utility costs were cited by 18pc, and taxation by 11pc — the latter showing a slight decline in concern compared to last year.

Energy insecurity remains a key operational issue, with 47pc of businesses reporting loadshedding on the day of the interview. While still high, this figure was lower than in the same quarter of previous years, indicating possible regional or seasonal improvement.

A notable change was the reported decline in bribery. Only 15pc of respondents said they had paid a bribe in the past six months, down from 34pc in Q4 2024. Bribery was most prevalent among traders (20pc), followed by service providers (13pc) and manufacturers (12pc).

Gallup noted this may indicate improving transparency or growing risk aversion among firms. Overall, the survey reflects a measured improvement in sentiment within Pakistan’s private sector, particularly regarding current operations and perceptions of national direction.

However, forward-looking optimism remains tempered, and longstanding challenges such as inflation, energy supply, and governance continue to shape the business climate.

Published in Dawn, August 12th, 2025