The ongoing conflict between Iran and Israel could significantly impact Pakistan’s fragile economy, mainly by driving up global oil prices, according to a new analysis.
Experts warn that any surge in crude oil prices would lead to a sharp increase in Pakistan’s current account deficit and inflation, putting more pressure on the already struggling economy.
The report outlines various scenarios based on oil prices. If crude oil reaches $75 per barrel, Pakistan’s current account deficit may rise by $2.3 billion. At $80 per barrel, the negative impact could be around $2 billion.
The deficit could worsen to $3.1 billion if oil prices hit $85 per barrel, while prices touching $90 may push it up by $3.49 billion. The situation becomes even more alarming if prices surge to $95 or $100 per barrel, adding $3.88 billion and $4.27 billion respectively to the deficit.
Such price shocks would not only inflate import bills but also trigger a fresh wave of inflation, making essential goods even more expensive for the public. The cost of transportation, food, and electricity could all climb further.
Therefore, analysts urge the government to closely monitor the situation and prepare contingency plans to safeguard Pakistan’s economy from the fallout of the Iran-Israel conflict and any global energy market disruptions it causes.