Protests have erupted across Pakistan, including in the capital city, as supporters of the Pakistan Tehreek-e-Insaaf (PTI) and others demonstrate against the continued imprisonment of former Prime Minister Imran Khan and inflated electricity bills. With both issues showing no signs of early resolution, the protests are expected to intensify.
Adding to the Shehbaz Sharif government’s challenges, a Gallup Business Confidence Index report revealed that businesses are accusing the government of economic mismanagement. The report, quoted by Express Tribune, indicates that business owners have grown increasingly pessimistic about their future due to ongoing political turmoil and a new tax-heavy budget.
Declining Business Confidence
The Gallup Business Confidence Index surveyed 454 businesses of varying sizes. The survey results showed a decline in confidence, with scores for the current business situation, future business outlook, and the direction of the country dropping by four to ten percent. The survey highlighted widespread dissatisfaction with the government’s financial plan for FY25, with 85 percent of respondents considering it not business-friendly.
Inflation emerged as the most cited problem, with 37 percent of businesses urging the government to address the issue, which has seen rates soar to 12.6 percent. Another persistent issue is the continuous disruption of power supply and load shedding, affecting six out of ten businesses surveyed. This quarter, 16 percent more businesses reported increased power outages due to the heavy load on the power infrastructure during the summer months.
Economic Mismanagement and Power Tariffs
Retail store operators have called on the government to control rising power tariffs for commercial establishments, which have surged to PKR 77.15 per unit, according to the Express Tribune. Concerns are also mounting in Pakistan’s financial sector amid ongoing negotiations with Chinese authorities over rescheduling energy sector loans. Finance Minister Muhammad Aurangzeb met with the governor of China’s central bank on July 26 to discuss the matter.
Businesses and banks are anxious about the outcome of these talks, fearing a negative impact on future investments if the desired outcome is not achieved. “We believe China will not outright reject Pakistan’s request to reschedule energy sector loans, but the final outcome appears bleak,” a senior banker told Dawn News.
Pessimism About the Future
The Gallup survey revealed that 57 percent of businesses expressed negative expectations about the future. The net future business confidence score has worsened by 36 percent since the last quarter, now standing at negative 14 percent.
As the Sharif government grapples with political and economic challenges, the growing discontent among businesses and the general public poses a significant threat to stability in Pakistan.