New Delhi, March 19: The ongoing conflict between the United States, Israel, and Iran poses a significant threat to Pakistan’s fragile economy. This is primarily due to Pakistan’s heavy reliance on imported fuel. The war has led to a surge in energy prices, affecting several countries in the Middle East.
If the conflict persists and energy prices remain elevated, Pakistan may face a severe economic crisis that could hinder its development. Any instability in global energy prices could impact GDP, potentially slowing down an economy that had just begun to stabilize after years of turmoil.
According to a report published in Karachi’s Dawn newspaper, “The effects of the war will not be limited to just high oil prices and supply disruptions. A prolonged conflict could weaken the flow of foreign remittances and reduce export demand due to sluggish international trade.”
An increase in petroleum imports could rapidly escalate the import bill, while exports, which had already dropped by nearly 8 percent from July to February, may weaken further due to economic stagnation. Additionally, any downturn in the economies of Gulf countries, which account for more than half of Pakistan’s total remittances, could deliver a negative external shock. All these pressures could lead to an increase in Pakistan’s balance of payments deficit.
If these trends continue, the current account deficit could rise significantly. This situation echoes the crisis of 2022 when rising global oil and commodity prices brought the economy to the brink, forcing Pakistan to seek assistance from the IMF.
The public impact could be even more severe and long-lasting, as high global oil prices directly lead to increases in petrol and electricity rates. Furthermore, rising transportation and logistics costs could contribute to widespread inflation.
If crude oil prices approach the highs seen during the Ukraine war, Pakistan could find itself trapped in a cycle of high inflation again, adversely affecting low- and middle-income families that have yet to fully recover from previous shocks.
My name is Bhupendra Singh Chundawat. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
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