The government of Prime Minister Shehbaz Sharif as “worse” manager of the economy, the country’s business owners have become more pessimistic about their future because of continued political turmoil and the new tax-heavy budget, according to a latest survey.
The values were negative for all three strands as Gallup Pakistan surveyed the owners of 454 small, medium and large businesses from more than 30 districts in the second quarter of 2024 to compile its Gallup Business Confidence Index report.
In the Index the score for current business situation, future business situation and direction of the country declined by four to 10%, the survey reports.
A significant number of businesses thought the government’s new financial plan for FY25 was not business-friendly while about two in five businesses see inflation as their biggest problem.
Like first quarter, price hike was the most cited problem that almost two out of five businessmen, 37%, would like the government to address.
The inflation, which soared to 12.6% last month in June, remains backbreaking and continues to erode the purchasing power of consumers.
More than half, 54%, of Pakistan’s businesses think that the current Pakistan Muslim League-Nawaz government is worse than the previous government in managing the economy, according to the survey.
“Owing to continued political uncertainty and the recently announced heavy-on-taxation federal and provincial budgets have had a significant impact on business optimism in the country,” said Bilal Ijaz Gilani, an executive director at Gallup Pakistan and chief architect of Gallup Pakistan Business Confidence Index.
The business community, which is already burdened with various regulatory measures and taxes through direct and indirect means, expressed serious reservations on the new budget while being surveyed, he said.
The number of businesses which want the government to solve their taxation issues has risen considerably from the first quarter because of the increased taxes the government imposed in the federal budget last month.
Six out of 10 businesses surveyed said they were faced with crippling load-shedding. This quarter 16% more businesses said the power outages had increased due to heavy load on power infrastructure in the country in summer. Overall, 39% businesses surveyed said no to loadshedding while 61% said yes.
Asked how well their businesses were doing, the owners and managers said the national and global challenges had made economic security a distant dream in Pakistan. Resultantly, the net current business situation score saw a fall of 16% in the second quarter of 2024.
The businesses appeared more pessimistic about the future as 57% expressed negative expectations while only 43% expect things to get better. The net future business confidence score has worsened by 36% since the last quarter and is now at -14%.
The pessimistic expectations for future business conditions were prevalent specially among those selling hardware and tools, electrical items and manufacturing products. The businesses selling home decor and accessories, gift items like toys and sports related, and cosmetics were among the most optimistic.
The net direction of the country score also moved southward to -64%, worsening by four percentage points from the previous quarter as overall trend for the past few quarters has been consistently negative.
“Only 18% of respondents claimed that the country is heading in the right direction,” the report said.
A majority, 54%, of businessmen said the current economic managers from the PML-N government were worse than their counterparts in the previous government in terms of economic management. Twenty-three percent respondents from manufacturing sector thought the current and previous governments were the same.
A sweeping majority of businessmen, 85%, do not consider the government’s new financial plan as a “good budget”, the survey said. Eleven percent of the manufacturers and 15% service providers said the budget was business friendly.
Because of high inflation and poor business conditions nine percent more employers, especially manufacturers, had to decrease their workforce in the second quarter. Six out of 10 businesses or 60% said their sales were worse this year. More manufacturers (66%) reported worse sales as compared to service providers (58%).
“Governments in Pakistan need to listen and address the voice of business communities across Pakistan,” said Gilani.
