Islamabad [Pakistan], March 22 (ANI): A fresh assessment by the Pakistan Institute of Development Economics (PIDE) has flagged serious risks to Pakistan’s economy, warning that any disruption in the Strait of Hormuz could trigger a chain reaction of inflation, currency pressure, and external instability.
The study highlights how deeply dependent Pakistan remains on vulnerable global energy routes, as reported by Geo News. It stresses that Pakistan’s economic structure is highly exposed to oil supply shocks, with even minor disturbances capable of driving up fuel prices and worsening inflation.
Titled “Pakistan’s Exposure to a Strait of Hormuz Shock: Fuel Pricing, Inflation, and External Vulnerability,” the research presents a detailed scenario analysis of potential economic fallout. Nearly one-fifth of global petroleum—around 20 million barrels daily—passes through the Strait, making it a strategic chokepoint. Any geopolitical tension or logistical breakdown in the region could instantly send oil prices soaring.
For Pakistan, where energy imports make up more than 22% of total imports, the consequences could be severe. The report explains that rising oil prices are only one part of the problem: freight costs, insurance premiums, currency depreciation, and domestic taxes all combine to inflate final fuel prices, amplifying the burden on consumers.
Using scenario-based modelling, the report estimates that even a mild disruption could push inflation close to 9% within months, while more severe shocks could drive it beyond 12%. At the same time, the country’s external balance could worsen sharply, with rising import bills weakening the rupee and deepening financial instability, Geo News highlighted.
The study also points to high-speed diesel as a major driver of inflation, given its central role in transport, agriculture, and food supply chains. It warns that Pakistan’s economic vulnerabilities are far greater than often acknowledged and that a Hormuz disruption would not remain an external issue but could quickly spiral into a domestic economic crisis.
(This content is sourced from a syndicated feed and is published as received. The Tribune assumes no responsibility or liability for its accuracy, completeness, or content.)
