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Pakistan GDP Growth Slows to 2% Amid Middle East Conflict Risks
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Moneycontrol•19-10-2026, 15:14
Pakistan GDP Growth Slows to 2% Amid Middle East Conflict Risks
- •Pakistan's gross domestic product grew by 2% in the quarter ending June, missing economist forecasts of 3.5% and slowing from 4.42% in the previous period.
- •The ongoing conflict in the Middle East poses fresh risks to Pakistan's economic recovery by driving up energy costs and fueling inflation.
- •As a heavy importer of energy, Pakistan remains particularly vulnerable to oil-price shocks that could strain its currency and foreign-exchange reserves.
- •The central bank has kept borrowing costs steady, maintaining interest rates unchanged for three consecutive meetings while monitoring inflation and growth risks.
- •Despite recent uncertainties, Pakistan enters this period with stronger financial buffers, including foreign-exchange reserves at $21.4 billion and recent credit-rating upgrades by Moody's and S&P Global Ratings.
Key Questions Answered
Pakistan's gross domestic product rose by 2% in the three months ended June, falling short of the 3.5% expansion forecast by economists and dropping from 4.42% growth in the January-March period.
Pakistan relies heavily on imported energy, making it particularly vulnerable to oil-price shocks. A sustained increase in crude prices raises the import bill, places pressure on the currency and foreign-exchange reserves, and fuels inflation by increasing energy costs.
Pakistan's foreign-exchange reserves have climbed to $21.4 billion. Additionally, the government successfully raised a record $3 billion from a high-yield bond sale, tapping strong demand in global debt markets.
