PIAF warns of deepening industrial slowdown as business confidence falls sharply

By Farzana Chaudhry
LAHORE:
The Pakistan Industrial and Traders Associations Front (PIAF) has voiced serious concern over a sharp decline in business confidence, warning that rising energy costs, inflation, and geopolitical tensions are pushing the private sector toward a period of deepening uncertainty and slowing economic activity.
In a statement, PIAF Chairman and President of the Lahore Chamber of Commerce and Industry, Faheemur Rehman Saigol, along with Senior Vice Chairman Nasrullah Mughal and Vice Chairman Tahir Manzoor Chaudhry, said the latest Gallup Pakistan Business Confidence Survey reflects a “deep and alarming downturn” in industrial sentiment.
The survey, conducted in April 2026 across 510 businesses nationwide, shows a significant drop in confidence during the first quarter of the year. Only 41 percent of firms reported positive current business conditions, while 57 percent expect further deterioration in the coming months. Overall confidence levels declined by 25 percentage points compared to the previous quarter, marking a shift from cautious optimism to sustained pessimism.
PIAF leaders highlighted that the downturn is evident across all key indicators, including current performance, future expectations, and perceptions of the national economic direction. Net sentiment regarding the country’s economic trajectory has fallen sharply to negative 32 percent, compared to negative 8 percent in the previous quarter.
According to Faheemur Rehman Saigol, the data indicates that Pakistan’s private sector is facing “multi-layered pressure” from inflation, rising fuel costs, energy shortages, and external shocks. He noted that high input costs combined with weak demand are severely disrupting production cycles, particularly in manufacturing and export-oriented industries.
The statement identified inflation as the leading concern for 37 percent of businesses, while 25 percent cited fuel and energy price increases as a major challenge. Additionally, 57 percent of firms reported experiencing load-shedding during the survey period—an increase of 15 percentage points from the previous quarter—further hampering industrial productivity.
Nasrullah Mughal emphasized that energy instability has become a critical structural issue, warning that rising electricity tariffs and unreliable supply are eroding industrial competitiveness in both regional and global markets. He cautioned that without immediate corrective measures, escalating production costs could force many small and medium enterprises (SMEs) to scale down operations.
The survey also found that 62 percent of businesses consider inflation and input costs their primary operational challenge, while 73 percent reported an increase in overall expenses compared to the previous quarter. Meanwhile, 46 percent of respondents believe governance and economic management have deteriorated, indicating weakening confidence in policy direction.
PIAF Vice Chairman Tahir Manzoor Chaudhry pointed to regional geopolitical tensions—particularly developments in the Middle East—as a major external risk. According to the survey, 81 percent of businesses reported negative impacts from these developments, primarily through rising global oil prices and increased energy costs.
Faheemur Rehman Saigol urged the government to introduce immediate relief measures, including rationalizing energy tariffs, ensuring stable fuel pricing, and improving access to working capital financing. He stressed that restoring business confidence is essential for economic stability, warning that continued deterioration in sentiment could translate into an actual contraction in industrial output.