Pakistan suffers $1.4 billion economic hit amid geopolitical tensions: Report
New Delhi, June 4
Pakistan's economy has suffered losses of $1.4 billion over the past seven months as border tensions with Afghanistan and the ongoing Middle East crisis disrupted trade flows and export activity, a report has said.
According to an analysis by Kabul Now, the country lost nearly $850 million due to the closure of border crossings with Afghanistan between October 2025 and May 2026.
The report described tensions with Afghanistan and the wider Middle East conflict as two major shocks to Pakistan's economy, with the conflict involving Iran further damaging export activity across Gulf markets.
Pakistan's transport industry has also been affected significantly, as transport companies that previously earned around $200 million annually through Afghan transit and passenger vehicle movement saw operations disrupted following prolonged border closures.
In addition, the ongoing regional conflict has further weighed on Pakistan's external trade, with the report estimating that hostilities involving Iran and broader instability in the Middle East resulted in nearly $600 million in export-related losses across Gulf markets.
Despite Pakistan's overall trade volume reaching nearly $28 billion during the past nine months, it still marked a decline of about 23 per cent compared to the same period last year.
The deterioration in trade relations between Pakistan and Afghanistan stems largely from disputes over the presence of Tehreek-e-Taliban Pakistan (TTP) fighters in Afghanistan, which gradually escalated from border tensions into wider hostilities.
Following military exchanges between both sides, major border crossings, including Torkham, Spin Boldak and Bahramcha, were shut, severely affecting trade flows.
The prolonged disruption has pushed Afghanistan to increasingly rely on alternative trade routes, including Iran's Chabahar Port and transport corridors linking China and Central Asia, reducing dependence on Pakistani transit networks.
Trade between the two neighbours has also witnessed a sharp decline. Bilateral trade fell from $2.46 billion in 2024 to $1.77 billion in 2025, according to available figures.
The extended closure of trade routes has disrupted supply chains, affected movement of food, fuel and consumer goods, and caused heavy financial losses for traders and transport operators on both sides of the border, according to the report.
— IANS
Reader Comments
For years, Pakistan has been using the Afghan transit route as a political tool. Now when the tables turn, they are paying the price. But let's not forget that Pakistan's suffering is also tied to their support for terror groups like TTP. Actions have consequences.
It's sad to see any country's economy suffer like this, even if it's Pakistan. Ordinary citizens will bear the brunt of rising prices and lack of jobs. Hopefully, Pakistan's leadership realises that stability and good relations with neighbours are more important than petty rivalries.
Interesting how the border closure hit transport companies so hard. $200 million annually from Afghan transit is a huge amount. Pakistan really shot itself in the foot here. Meanwhile, Afghanistan is smartly turning to Chabahar and Central Asia—bypassing Pakistan completely.
Pakistan lost $1.4 billion but their army still thinks they can bully neighbours. Indian traders should learn from this: never make your economy dependent on unstable regions or hostile policies. Pakistan's 23% decline in trade is a warning for everyone.
The TTP issue is a classic case of 'what goes around comes around'. Pakistan supported Taliban for years to get leverage against India and Afghanistan, but now the same extremists are biting back. Their economy is paying the cost for their short-sighted foreign policy. 🤷♀️
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