Global Trade War: Impact on Pakistan

ISLAMABAD: According to Jihad Azour, Director of the Middle East and Central Asia Department at the International Monetary Fund (IMF), Pakistan could be disproportionately affected by ongoing global trade tensions. Azour made these remarks during a press briefing concerning the Regional Economic Outlook for the Middle East and Central Asia.

Responding to a question about the potential effects of the global tariff war on Pakistan, Azour suggested that these trade tensions might have a comparatively greater impact on Pakistan than on other countries in the region.

Azour elaborated that while the direct impact on Pakistan could be mitigated through strategic measures, these steps would enable the nation’s economy to adapt to significant global shifts in trade and economic prospects. By strategically repositioning itself, Pakistan could navigate potential risks and capitalize on evolving trade routes.

He noted that certain countries, including Pakistan and Jordan, have more substantial exposure to trade with the United States, presenting unique challenges. However, Azour emphasized that shifts also create opportunities. Recent years have witnessed successive geopolitical and geo-economic shocks that have influenced the region.

Strategically located at the crossroads of East and West, the region benefits from trade routes and connectivity. Azour urged countries in the region to pursue new avenues for strengthening economic and trade relationships with nearby regions and fostering increased connectivity and cooperation within the region.

Azour also acknowledged Pakistan’s notable advancements in re-establishing macroeconomic stability over the past year and a half. He pointed out improvements in growth and a decrease in inflation, from 12.6 percent in the 2024 fiscal year to a projected 6.5 percent this year, with expectations of remaining stable next year. Azour mentioned that Pakistan’s debt is stabilizing and that rating agencies have recently upgraded the country’s credit rating.