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Iran-Israel War Spillover: Pakistan's Economy Braces for Severe Impact

The killing of Iran's Supreme Leader in strikes has triggered violent anti-US protests across Pakistan, resulting in casualties. Analysts warn that escalating West Asia tensions will severely impact Pakistan's economy through higher fuel prices and expensive electricity. The potential closure of the Strait of Hormuz and job losses for Pakistani workers in the Gulf threaten crucial remittance flows. Prime Minister Shehbaz Sharif has condemned the attack while experts highlight profound long-term economic and political consequences for the region.

Key Points: Iran-Israel War to Hit Pakistan's Economy Hard

  • Violent protests in Pakistan
  • Strait of Hormuz closure risks
  • Fuel and electricity price hikes
  • Remittance losses from Gulf workers
  • Geopolitical uncertainty deepens
3 min read

Iran-Israel war to hit Pakistan's economy

Pakistan faces economic turmoil from Middle East conflict, with protests, inflation, and remittance losses looming, analysts warn.

"It could reshape the entire Middle East, affect the world economy, and could last a long time. - Salman Bashir"

New Delhi, March 5

The killing of Iran's Supreme Leader Khamenei in US-Israeli strikes is particularly unsettling for Iran's neighbours such as Pakistan, which will be adversely impacted on the economic front, according to an article in China Daily.com.

"There is great sorrow and concern (in Pakistan). The war seems to be intensifying," said Salman Bashir, former foreign secretary of Pakistan.

"It could reshape the entire Middle East, affect the world economy, and could last a long time. Its geopolitical consequences could be severe," Bashir said.

The article highlights that violent demonstrations against the United States broke out across Pakistan following the killing of Khamenei on Saturday, and intensified over the past few days. The protests have resulted in at least 25 deaths and numerous injuries.

Clashes erupted at the US Consulate General in Karachi, Pakistan's largest city, on Sunday as demonstrators attempted to storm the facility. The same day, protesters attacked the US Consulate in Lahore, before police thwarted the demonstrations.

Pakistan's Prime Minister Shehbaz Sharif expressed his condolences to the deceased in Iran on Sunday. "The Government and the people of Pakistan join the people of Iran in their hour of grief and sorrow and extend the most sincere condolences on the martyrdom" of Khamenei, Sharif wrote on X.

"Pakistan also expresses concern over (the) violation of the norms of international law. It is an age-old convention that the Heads of State/Government should not be targeted," he added.

Analysts said the protests were caused by uncertainty in people's minds following Khamenei's death.

Khalid Taimur Akram, executive director of Pakistan Research Center for a Community with Shared Future in Islamabad, said tensions in West Asia, if escalated, will severely affect Pakistan.

While Pakistan is not directly involved in these conflicts, the economic and political effects can still be profound, Akram said.

Noting the closure of the Strait of Hormuz, he said, "This will result in a hike in fuel prices, electricity will be more expensive, making the daily lives of people more difficult."

It will also affect many Pakistanis working in West Asia, who could lose jobs or face difficulties, reducing the remittances they send back home, he added.

Pakistan is one of the largest trading partners of the Gulf countries, Akram said. "Considering the current scenario, it can be said that if the conflict escalates, the whole world will suffer."

Shujaat Ahmed, an independent economic analyst in Pakistan, said the economic effect of Khamenei's killing in the short term will be on inflation, but the long-term effect will depend on the duration of the conflict.

- IANS

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Reader Comments

S
Sarah B
The human cost is already terrible—25 deaths in protests. It's a stark reminder that geopolitical games have real consequences for ordinary people. The focus should be on de-escalation and protecting civilians, not just economic forecasts.
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Vikram M
Pakistan's economy was already on shaky ground. This external shock from the Iran-Israel conflict could be the final push. It's worrying for the entire subcontinent's economic health. Hope our policymakers are watching this closely and making contingency plans. 🇮🇳
R
Rohit P
The article rightly points out the risk to remittances from West Asia. So many families in India and Pakistan depend on that money. If jobs are lost there, it will cause immense hardship back home. A full-blown war would be a disaster for South Asia too.
P
Priya S
While the economic impact is critical, I find PM Sharif's statement interesting. He talks about violation of international law in targeting a head of state. It's a valid point that often gets lost in the noise. The rules-based order seems to apply selectively.
K
Karthik V
Strait of Hormuz closure = global oil crisis. We in India need to fast-track our renewable energy plans and reduce this vulnerability. Can't keep our economy hostage to Middle Eastern conflicts every few years. Time for serious energy independence.

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