KARACHI: Amid uncertainty over the Middle East crisis, inflation and political instability, around 70-80 per cent of businesses are delaying or revising investment decisions and diversifying their supply chains to reduce exposure to affected trade routes. The strategic focus is shifting towards risk mitigation and operational resilience.

This was revealed in the results of the Business Confidence Survey (BCI) Wave 29, conducted by Overseas Investors Chambers of Commerce and Industry (OICCI) across Pakistan in the second quarter of 2026.

The survey reveals a marked deterioration in business sentiment, with the overall BCI falling nine percentage points to a positive 13pc, down from 22pc in Wave 28, as the ongoing war in the Middle East casts a long shadow over investment confidence, supply chains, and economic growth prospects.

The decline is driven primarily by elevated inflationary pressures, rising fuel costs, and the intensifying fallout from the war in the Middle East, says an OICCI press release.

Respondents cite inflation, rupee volatility and Middle East crisis as top risks delaying investment

The services sector recorded the sharpest drop, falling 20 points to 14pc, while manufacturing declined by seven points. The retail sector was the only segment to show improvement, rising three points to a positive 20pc.

Investment intentions have weakened sharply, with the New Investment Index collapsing 10 points to just 2pc, reflecting a near-total freeze in near-term capital deployment, the survey said.

The survey’s global business situation indicator deteriorated by 31 points, and businesses across all sectors expect the disruption to persist well beyond six months.

“The results of Wave 29 are a clear signal that businesses operating in Pakistan are navigating an increasingly complex environment,” OICCI Secretary General M. Abdul Aleem said.

“The ripple effects of the Middle East conflict are being felt across every sector, from investment freezes to supply chain restructuring,” he said.

While the fundamentals of the Paki­stani market remain intact, restoring business confidence will require policy stability, cost relief, and a concerted effort to shield the economy from prolonged geopolitical uncertainty, he added. Looking ahead, 34pc of respondents anticipate a negative outlook over the next six months, up sharply from 22pc in Wave 28, with political instability, fuel prices, and inflation cited as the top concerns, he said.

When asked about the key structural threats to business growth, Mr Aleem said rising inflation topped the list at 84pc, followed by high taxation at 79pc, and concerns over currency stability and inconsistent government policies both at 61pc.

Business confidence among OICCI member companies, representing the country’s leading foreign investors, remained relatively resilient, improving marginally to a positive 28pc.

Published in Dawn, June 3rd, 2026