Pakistan business confidence jumps, but investment outlook stays weak: OICCI

Business confidence in Pakistan has improved significantly, according to a new survey, but investment plans remain in negative territory, raising concerns about long-term economic growth.

The Overseas Investors Chamber of Commerce and Industry (OICCI) reported Thursday that its Business Confidence Index (BCI) rose 16 percentage points, from negative 5% in late 2024 to positive 11% in its latest survey. The findings were released after OICCI leadership met with Finance Minister Muhammad Aurangzeb.

“The uptick in business confidence is a clear sign that our economic direction is on the right track. We are focused on creating a conducive environment for investment, supporting private sector growth, and ensuring long-term macroeconomic resilience. The improved sentiment among businesses is both encouraging and a validation of our collective efforts,” Finance Minister Muhammad Aurangzeb said in a statement issued by OICCI.

The survey, conducted in March and April 2025, showed increased optimism across major sectors, including manufacturing, retail and services. Employment prospects and expansion plans also improved. However, new investment plans, though up 19%, remained negative.

“While the overall BCI has improved, the negative investment outlook is concerning and must be addressed to boost economic growth,” said Abdul Aleem, OICCI’s chief executive.

Respondents cited inflation, taxation, inconsistent government policies, rupee devaluation, law and order, and political stability as key challenges. The top two concerns — inflation and taxation — remained unchanged from the previous survey.

Aleem attributed the improved sentiment to macroeconomic stability, declining inflation and expected business condition improvements over the next six months.

The manufacturing sector led the recovery, jumping from negative 3% to positive 15%. Retail and wholesale sectors rose from negative 18% to positive 2%, while services climbed from 2% to 10%.

OICCI President Yousaf Hussain noted that confidence has steadily risen over the past two years. “This recovery reflects the resilience of Pakistan’s business sector,” he said, calling for greater policy consistency and stakeholder engagement.

The survey found 45% of respondents optimistic about the next six months, citing economic growth, government policies and security improvements. Still, 53% reported negative views on recent business conditions — an improvement from 66% in late 2024.

Foreign investors’ confidence also rose sharply, from positive 6% to 17%, driven by global economic improvements and expectations of increased capital investment.

The OICCI survey, conducted twice yearly, covers businesses representing nearly 80% of Pakistan’s GDP. It includes responses from major cities such as Karachi, Lahore, Islamabad and Peshawar.