KARACHI: Pakistan’s fragile economic recovery could come under pressure if Israel-US strikes on Iran escalate into a wider regional conflict, threatening oil supplies and remittance flows vital to the country’s balance of payments, officials and independent economists said on Saturday.
The United States and Israel struck Iran following weeks of rising tensions, while Pakistan has also faced renewed border clashes with Afghanistan in recent weeks.
Economists warn that a wider Middle East conflict could quickly destabilize Pakistan’s hard-won macroeconomic gains under a $7 billion International Monetary Fund program since the country relies heavily on Gulf states for imported fuel and worker remittances, which are projected at $41 billion this fiscal year.
Iran has already targeted several neighboring countries in an attempt to strike US military bases in the region, raising fears of a broader escalation and drawing condemnation from regional governments, including Pakistan.
“Pakistan’s western borders are in a state of war,” Muzzammil Aslam, finance minister of the country’s northwestern Khyber Pakhtunkhwa province bordering Afghanistan, told Arab News over the phone. “Given the limited trade with western borders, Pakistan exports are unlikely to be affected. However, if the war expands across the Middle East, it will definitely impact the remittances.”
