Pakistan’s economic landscape, under the IMF’s Extended Fund Facility since September, has seen some positive shifts, particularly in fiscal recovery, as indicated by recent reports. The Overseas Investors Chamber of Commerce and Industry (OICCI) released its Business Confidence Index (BCI) Survey-Wave 26, showing a slight but notable 9% improvement in business confidence, rising from negative 14% to negative 5%. Factors like economic growth, a stable exchange rate, and decreasing inflation have contributed to this optimism, especially within the services sector, which saw a 16% confidence boost.

However, despite the positive signs, confidence remains largely negative, with the overall business environment still struggling due to persistent challenges. The sharp decline in the New Investment Index, which fell to negative 23% from negative 12%, signals growing caution among businesses, especially regarding new investments. The survey also highlights concerns over high inflation, political instability, and rising energy prices, which continue to overshadow optimism.

In parallel, Ipsos Group’s quarterly Consumer Confidence Index also indicates a shift in sentiment, with fewer people viewing the economy as weak. Yet, confidence in making significant purchases and long-term investments remains low, pointing to a fragile recovery.

Meanwhile, the Asian Development Bank (ADB) projects a 3% GDP growth for fiscal year 2025, slightly up from previous forecasts, and inflation rates are expected to decrease. However, agricultural growth is predicted to suffer due to adverse weather conditions. A more accommodative monetary policy could support recovery, but the risks tied to the IMF’s reforms, such as steep price hikes in utilities and currency depreciation, have left many Pakistanis grappling with eroded purchasing power.

While improvements in certain economic indicators are evident, political instability, high debt, and inflation remain key obstacles to sustainable growth, necessitating careful policy adjustments and continuous monitoring to secure long-term stability.