Pakistan’s economy faces deeper stress amid West Asia crisis

New Delhi, April 9 Pakistan’s economy has come under further stress due to external shocks triggered by the West Asia crisis, as the country struggles under a mountain of foreign debt with weak GDP growth, declining investment and rising inflation, according to an article in Lisbon Post.

Public debt has surged dramatically over the past several years, rising from approximately Rs 43 trillion (Pakistani rupee) in 2018 to Rs 80.52 trillion by the end of fiscal year 2025. At the same time, external debt and liabilities have climbed to $138 billion, underscoring the country’s growing dependence on foreign financing, the article states.

It highlights that Pakistan is facing huge external financing pressures with the UAE seeking the return of $3.5 billion, while China pressed for repayment of $220 million owed to United Energy Petroleum. These demands have emerged at a time when Pakistan is not being able to repay its old loans and seeking further financial assistance to stay afloat.

The situation has taken a turn for the worse due to disruptions in oil and gas supplies triggered by the West Asia crisis. Domestic energy prices have surged with petrol prices rising to around Rs 458 per litre following an increase in the petroleum levy, LNG costs have risen by 38 per cent, and electricity tariffs have also shot up. This had led to a further acceleration in inflation which has increased the cost of living for the people.

Pakistan’s economic growth has averaged a lowly just 1.7 per cent between 2022 and 2025 due to which there are a lack of employment opportunities and poverty is rising. Unemployment is estimated to be between 22 and 24 per cent, while poverty levels range from around 29 per cent or even higher based on World Bank-linked assessments.

While investment levels are low in Pakistan, the problem has been made worse by the exodus multinational corporations from the country in recent years. These include Procter & Gamble’s closure of manufacturing operations, alongside reduced footprints or exits by Shell, Telenor, Uber, Yamaha, Eni, various foreign banks, and pharmaceutical companies.

Such departures signal deeper concerns about the business climate, regulatory consistency, and long-term profitability, the article states.

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