Latest surveys suggest that Pakistani consumers remain markedly more pessimistic than businesses. A gap between consumers and business sentiment is not unusual, as the two experience and access the economy differently. But if these surveys are credible indicators, the widening divergence warrants closer scrutiny and explanation from policymakers, economists and business leaders.

The September State Bank of Pakistan (SBP)–Institute of Business Administration (IBA) Confidence Index stood at 49.1 compared with just 33.6 on the Q3 Ipsos Consumer Confidence Index. This striking gap could reflect differences in how businesses and households interpret headline economic indicators, varying level of trust in government, or, more fundamentally, their contrasting economic realities: a financially stronger minority with greater resources, choices and capacity to absorb shocks versus a much larger population struggling individually with weaker purchasing power and greater vulnerability.

Dr Durre Nayab, Director, Socioeconomic Insights and Analytics, and former joint director at the Pakistan Institute of Development Economics (PIDE), offered a different explanation, attributing the apparent divergence largely to measurement methodology and sampling.

“To me, the gap is a measurement artefact. First, the two numbers aren’t on the same scale. The SBP-IBA index is a diffusion index, where 50 signals neutrality, zero indicates no confidence and 100 extreme confidence. The Ipsos index is constructed differently and has historically hovered in the 30s. So, 33.6 cannot be read as ‘16 points below neutral’ in the same way that 49.1 can be described as ‘near neutral’.”

Survey results indicate that consumers are less optimistic about Pakistan’s economy than businesses

She noted that the direction of the Ipsos index was, in fact, slightly positive: it rose 0.4 points to 33.6, while and 24 per cent of the respondents said the country is heading the right direction, up from 11pc in August 2024.

“Second, who gets surveyed matters most,” Ms Nayab said. “The business survey draws from about 2,000 large, Securities and Exchange Commission of Pakistan-registered firms, with about 500 surveyed each month, selected on the basis of the highest paid-up capital. It, therefore, captures the corporate top tier, not the kiryana store, the mohalla khokha or the small and medium enterprises.”

Large firms, she argued, are better positioned to pass higher costs on through prices, benefit from interest rate cuts, and hedge against risks. “Households, meanwhile, absorb those passed-on costs, often on fixed or informal incomes. The two groups are living different economic realities.”

Nasim Beg, CEO, Arif Habib Consultancy, believes the contrast stems partly from their different perspectives: businesses tend to be forward-looking, basing decisions on assessment of future economic conditions, while consumers respond more directly to their lived experience.

“The average consumer’s behaviour is influenced by lived reality. Over the last five years, Pakistani consumers have suffered a sharp erosion of purchasing power alongside income compression. Even if the economic outlook is improving, households continue to feel the cumulative impact of that squeeze.”

Ehsan Malik, former CEO, Pakistan Business Council, also blamed the divergence more to contrasting economic realities than differences in understanding. “Businesses are not truly optimistic: at 49.1, confidence remains below neutral, though expectations are improving. Larger firms can raise prices, alter products, defer investment, hedge risks and lobby for subsidies, guaranteed returns and protection.

“Consumers have no such options. They must absorb higher food, electricity, rent and tax costs, while slower inflation does not restore lost purchasing power.

“Trust further widens the divide when the burden of adjustment appears unfairly distributed. Consumers understand their vulnerability well. Pakistan has achieved some macroeconomic stabilisation, but confidence will converge only when it translates into secure jobs, recovering real incomes and affordable essentials.

“The divergence should therefore be seen as a policy warning, not a survey anomaly or evidence that consumers poorly understand an economy in which spending power has eroded”.

Industrialist Majyd Aziz attributed consumers’ pessimism primarily to small paychecks failing to keep pace with rising living costs. Pakistan’s import-dependent economy remains vulnerable to global supply and demand shocks, while deindustrialisation, galloping inflation, and depleting household savings have intensified the squeeze. “Unlike businesses, consumers buy daily and have their feet firmly on the ground,” he said.

Mr Aziz also questioned whether the Ipsos Consumer Confidence Index fully captures ground realities, noting that it surveyed 1,000 people by telephone rather than through face-to-face interviews. He found the provincial variations striking: 31pc of respondents in Balochistan believed the country was on the right track, compared to only 14pc in KP.

More tellingly, he said, only 10pc of consumers felt comfortable making household purchases, underscoring weak purchasing power and explaining difficulties facing domestic businesses. High electricity, gas, and fuel costs continue to strain household budgets despite the survey showing greater optimism about personal finances.

Mr Aziz argued that rising stock prices, property investment, automobile purchases and improving industrial indicators largely reflect the choices available to the affluent and should not automatically be equated with broad-based economic recovery. The survey’s optimism, he said, must, therefore, be weighed against the frustration, uncertainty and vulnerability confronting ordinary consumers.

Members of the government’s economic team and the State Bank were approached for comment, but no response had been received by the time this report was filed.

The writer is a former Dawn staffer.

Published in Dawn, The Business and Finance Weekly, September 28th, 2026