Business confidence falls to 13%, OICCI survey shows

KARACHI: Business sentiment in Pakistan weakened in the second quarter of 2026, with the Overseas Investors Chamber of Commerce and Industry’s latest Business Confidence Index survey showing a nine-point drop in overall confidence to +13% from +22% in the previous round.

The 29th wave of the survey found that around 70-80% of businesses are either postponing or reassessing fresh investment plans. OICCI said the decline was linked to continuing tensions in the Middle East, rising inflation, higher fuel prices, supply chain disruptions, policy uncertainty and concerns over economic growth. Respondents said these factors were affecting investment decisions, production costs, access to raw materials and business planning.

Sector-wise picture

Among the major sectors, services recorded the sharpest deterioration, with confidence falling 20 points to +14%. Manufacturing also posted a seven-point decline. Retail was the only segment to improve, gaining three points to reach +20%.

The survey also showed a marked weakening in investment appetite. The new investment index fell by 10 points to +2%, indicating that companies are largely holding back from making new investments under current conditions. According to the findings, many firms are instead trying to cut reliance on affected trade routes, diversify supply chains and reduce operational risks.

Business concerns and outlook

OICCI Secretary General M Abdul Aleem said the findings reflected the difficult conditions facing businesses in the country. "The Wave 29 results reflect that businesses in Pakistan are operating in a complex and uncertain environment," he added.

He said the effect of Middle East tensions was being felt across almost all sectors, including investment, supply chains and business planning. He added that Pakistan’s market fundamentals remained intact, but said rebuilding confidence would require policy continuity, lower costs, relief from energy and fuel pressures, and clear steps to reduce geopolitical uncertainty.

The survey found that the global business outlook index declined to 31 points, while companies in all sectors voiced concern that the current slowdown could last for more than six months. Looking ahead, 34% of respondents said they expected economic conditions to worsen over the next six months, compared with 22% in the previous survey.

Businesses identified political instability, fuel prices, inflation, high taxation, currency volatility and lack of policy continuity as the main risks. On structural challenges, 84% of respondents pointed to inflation as the biggest issue, 79% cited high taxes, and 61% highlighted currency instability and inconsistent government policies as major obstacles to growth.

Regional and member trends

Business confidence among OICCI member companies, which represent major foreign investors, was comparatively stronger and edged up to +28%. In major cities, confidence fell by 12 points to +11%. In other cities, including Peshawar, Quetta, Rawalpindi, Multan, Sialkot and Sukkur, confidence improved by three points to +22%.

The survey also noted that, despite near-term economic pressures, a number of firms are exploring generative artificial intelligence. OICCI member companies showed greater preparedness to use AI in technology platforms, core business functions and workforce training.

OICCI conducts the Business Confidence Index survey twice a year, and says its participants represent around 80% of Pakistan’s GDP.