Around 70-80% of businesses in the country are postponing or reconsidering new investment decisions, according to the latest Business Confidence Index (BCI) survey conducted by the Overseas Investors Chamber of Commerce and Industry (OICCI), which shows a notable decline in business confidence in Pakistan.

Releasing the results of the 29th wave of its BCI survey conducted during the second quarter of 2026, OICCI reported that overall business confidence dropped by nine percentage points to +13%, down from +22% in the 28th wave.

According to the survey, the major reasons behind the decline include ongoing tensions in the Middle East, rising inflation, higher fuel prices, supply chain disruptions, policy uncertainty and concerns about economic growth. Businesses said the current situation has impacted investment decisions, production costs, availability of raw materials and future planning. On a sectoral basis, the services sector recorded the steepest decline, with confidence falling by 20 points to +14%. The manufacturing sector also saw a drop of seven points. However, the retail sector was the only one to show improvement, with confidence rising by three points to reach +20%.

Investment trends have also weakened significantly. The new investment index fell by 10 points to just +2%, indicating that businesses are largely avoiding fresh investments amid prevailing uncertainty. The survey noted that most firms are focusing on reducing reliance on affected trade routes, diversifying supply chains and minimising operational risks.

OICCI Secretary General M Abdul Aleem said the Wave 29 results reflect that businesses in Pakistan are operating in a complex and uncertain environment. He noted that the impact of Middle East tensions is being felt across nearly all sectors, including investment, supply chains and business planning. He added that while the fundamental potential of the Pakistani market remains intact, restoring business confidence requires policy continuity, cost reduction, relief in energy and fuel pressures, and clear measures to mitigate geopolitical uncertainties.

The survey also found that the global business outlook index declined to 31 points, while companies across all sectors expressed concern that the current slowdown could persist for more than six months. Regarding the next six months, 34% of respondents expect economic conditions to worsen, compared with 22% in the previous survey. Businesses identified political instability, fuel prices, inflation, high taxes, currency volatility and lack of policy continuity as key risks.

In terms of structural challenges, 84% of respondents cited rising inflation as the biggest issue, 79% expressed concern over high taxes, and 61% highlighted currency instability and inconsistent government policies as major barriers to business growth. However, business confidence among OICCI member companies, which represent major foreign investors in the country, remained relatively stronger, increasing slightly to +28%.

In major cities, business confidence dropped by 12 points to +11%, while in other cities including Peshawar, Quetta, Rawalpindi, Multan, Sialkot and Sukkur, confidence improved by three points to +22%. The survey also revealed that despite short-term economic pressures, many firms are exploring the use of generative artificial intelligence. OICCI member companies, in particular, showed greater readiness to integrate AI into technology platforms, core business processes and workforce training. It is worth noting that OICCI conducts its Business Confidence Index survey twice a year, with participants representing approximately 80% of Pakistan’s GDP.