Pakistan business confidence drops to 13% as firms delay investment: OICCI

Pakistan's overall business confidence has fallen sharply, with the Overseas Investors Chamber of Commerce and Industry (OICCI) reporting a 9-percentage-point drop to a positive 13% in its latest survey. The decline is driven by inflationary pressures, rising fuel costs, and the intensifying fallout from the war in the Middle East.

What did the OICCI Business Confidence Survey find?

OICCI's Business Confidence Index (BCI) fell 9 percentage points to +13% in Wave 29, down from +22% in Wave 28. The survey, covering Q2 2026, found 70% to 80% of businesses are delaying or revising investment decisions. The New Investment Index collapsed 10 points to just 2%, signaling a near-freeze in near-term capital deployment.

The Wave 29 survey was conducted across Pakistan in the second quarter of 2026. OICCI's BCI is conducted twice a year and covers participants representing about 80% of Pakistan's GDP.

Which sectors saw the sharpest declines?

The Services sector recorded the sharpest decline, falling 20 points to 14%. Manufacturing confidence dropped 7 points.

Retail was the only segment to show improvement, rising 3 points to a positive 20%. The improvement contrasted with broader weakness across other sectors.

OICCI member companies, representing Pakistan's leading foreign investors, saw confidence rise marginally to +28%. Their relative resilience contrasts with the wider survey deterioration.

Why is the Middle East war hurting Pakistani business?

Around 70% to 80% of businesses across all sectors are delaying or revising investment decisions. Many are diversifying supply chains to reduce exposure to affected trade routes.

The strategic focus is shifting toward risk mitigation and operational resilience. The survey's global business situation indicator deteriorated by 31 points.

Businesses across all sectors expect the disruption to persist well beyond six months. The findings show how deeply the war is weighing on Pakistan's economic outlook.

What are businesses most worried about?

About 34% of respondents anticipate a negative outlook over the next six months, up sharply from 22% in Wave 28. Political instability, fuel prices, and inflation top the list of concerns.

Rising inflation was the biggest structural threat at 84%. High taxation followed at 79%, with currency stability and inconsistent government policies both at 61%.

How did regions and OICCI members fare?

Metropolitan business confidence fell 12 points to 11%. Non-metro cities, including Peshawar, Quetta, Rawalpindi, Multan, Sialkot, and Sukkur, saw a modest 3-point improvement to 22%.

OICCI member companies showed notably higher readiness for large-scale generative AI integration. Their focus spans technology platforms, core business processes, and workforce development.

Despite near-term headwinds, leading foreign investors are positioning for long-term transformation, the survey said.

What does OICCI say should be done?

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

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

He said the fundamentals of the Pakistani market remained intact. Restoring confidence would need policy stability, cost relief, and protection from prolonged geopolitical uncertainty.