DID Press: Pakistani economic analysts have warned that ongoing regional tensions, particularly a potential war between Iran and United States, could have severe repercussions for Pakistan’s economy.
Hafeez Pasha, former finance minister, cautioned that a 25–30% rise in oil import costs could heavily disrupt Pakistan’s trade balance, dealing a $12–14 billion blow to the economy. He also noted the country’s heavy reliance on remittances from Middle East-based workers, which account for more than 55% of such foreign income. With escalating regional instability, these inflows could drop by $4 billion, adding pressure on the country’s foreign reserves.
Analysts warn that if oil prices reach $120 per barrel, inflation could surge to 30%, affecting major sectors:
- Transportation: Rising fuel costs could reduce activity in a sector representing ~10% of the economy.
- Industry: Disruption of LNG imports from Qatar may halt production of cement, fertilizers, and textiles, risking widespread industrial slowdown.
- Agriculture: Closure of fertilizer plants could lower crop yields and threaten national food security.
Proposed mitigation measures include daily fuel price adjustments to prevent hoarding, gasoline rationing per vehicle, and shifting some road transport to rail to reduce fuel consumption and costs.
Experts also warn of intensified pressure from the International Monetary Fund, which could impose stricter austerity measures if the economic crisis deepens.