Pakistan business confidence plunges amid high fuel costs, inflation

The Overseas Investors Chamber of Commerce and Industry (OICCI) has reported a significant decline in business confidence across Pakistan during the second quarter of 2026. Ongoing conflict in the Middle East is a major factor weighing on investor sentiment, supply chains, and economic prospects. According to the findings of the Business Confidence Index (BCI) Survey Wave 29, the overall confidence level dropped by nine percentage points to a positive 13pc, compared to 22pc recorded in the previous survey wave. The downturn was largely attributed to mounting inflation, higher fuel prices, and growing economic uncertainty linked to the regional conflict. Among the sectors surveyed, services recorded the steepest fall, declining by 20 points to 14pc, while the manufacturing sector slipped by seven points. In contrast, the retail sector posted a modest improvement of three points, reaching positive 20pc. The survey also highlighted a sharp decline in investment appetite, with the New Investment Index plunging by 10 points to only 2pc, indicating that businesses are largely holding back on fresh capital spending in the near term. Around 70pc to 80pc of companies across various sectors said they were either delaying or reassessing investment plans while also attempting to diversify supply chains to minimise exposure to disrupted trade routes. Businesses are increasingly prioritising operational resilience and risk management strategies. OICCI Secretary General M. Abdul Aleem said the latest survey reflected the growing challenges faced by businesses operating in Pakistan. “The impact of the Middle East conflict is spreading across all sectors, from halted investments to restructuring of supply chains,” he said, adding that restoring confidence would require stable policies, relief from rising costs, and measures to protect the economy from prolonged geopolitical uncertainty. The survey showed that 34pc of respondents expect business conditions to worsen over the next six