Pakistan sees revival in business sentiment as economic indicators improve

Karachi (Web Desk): Business sentiment in Pakistan has shown a sharp turnaround, with renewed investor confidence reflecting greater economic stability, falling inflation, and improved outlook for the coming months.

The Pakistan Stock Exchange (PSX) has emerged as a top global performer, recording a remarkable gain of over 80% during the past year. This performance has been achieved despite persistent border tensions with India and incidents involving missiles and drone strikes.

 While Pakistan’s markets displayed resilience under pressure, Indian financial markets suffered significant losses, and investor sentiment remained subdued.

Across various sectors, performance has improved substantially. The manufacturing industry, previously down by 3%, has now risen to +15%.

The retail and wholesale trade sector moved from a steep decline of -18% to a modest +2%, while the services sector improved from +2% to +10%.

Pakistan’s external position was further strengthened after the International Monetary Fund (IMF) approved the release of a $1 billion loan tranche following a successful program review.

 An additional $1.4 billion was cleared under the Climate Resilience Fund, helping to boost the country’s foreign exchange reserves — which had earlier dropped below $8 billion. This injection is seen as vital to supporting the rupee and managing import-related expenditures.

Finance Minister Muhammad Aurangzeb welcomed the progress, stating that the increase in business confidence confirms Pakistan’s economic trajectory is heading in the right direction.

 He emphasized the government’s focus on creating a more attractive climate for investment, empowering the private sector, and ensuring sustained macroeconomic stability.

Supporting this sentiment shift, a recent Business Confidence Index released by the Overseas Investors Chamber of Commerce and Industry (OICCI) shows Pakistan’s business confidence climbing from -5% in Oct–Nov 2024 to +11% in Mar–Apr 2025 — a notable 16-point rise.

Experts suggest that Pakistan stands at a turning point. If fiscal discipline continues and further investor-friendly reforms are enacted, the country could enter a phase of sustained recovery and long-term stability.

In contrast, Bloomberg Economics' India-based analyst Abhishek Gupta warned that increasing geopolitical tensions may further dampen investor trust in India’s markets.