Karachi: Mian Zahid Hussain, President of Pakistan Businessmen and Intellectuals Forum, expressed concern over the escalating conflict involving the United States, Israel, and Iran, warning of a potential global energy shock that could impact Pakistan's economic recovery. With Brent crude prices rising above $105 per barrel and LNG prices at $8.72 per mmBtu due to disruptions in the Strait of Hormuz, he emphasized the need for urgent policy measures to protect the economy. Hussain noted that recent fuel price hikes are just the beginning of a broader economic challenge that could shrink Pakistan's GDP by 1%.
According to Pakistan Businessmen and Intellectuals Forum, Pakistan's primary vulnerability is its external sector. The economy faces an expected external shock in the next fiscal year, driven by a 25 to 30 percent rise in the petroleum import bill and increasing global shipping and insurance costs. With most remittances originating from the Middle East, any slowdown in the region could significantly reduce foreign inflows, widening the current account deficit and pressuring the Pak Rupee.
Mian Zahid Hussain highlighted the importance of completing the ongoing International Monetary Fund (IMF) review, which has shifted from a fiscal goal to a critical economic necessity. Recent virtual discussions with the IMF have shown progress, but the organization is closely examining the effects of the Middle East conflict and energy price volatility on Pakistan's financial stability before approving further funds.
To secure the next IMF tranche and sustain investor confidence, Hussain urged the government to adhere to its structural reform agenda. He noted that maintaining a tight monetary policy, ensuring fiscal consolidation, and pursuing energy sector reforms are essential, although the business community seeks a reduced policy rate to lower business costs and create jobs. He stressed that tackling this global crisis requires unity, foresight, and a commitment to financial discipline to protect domestic industries and citizens from economic repercussions.
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