Pakistan economy faces fresh risks amid Middle East conflict: report

The strengthening of Pakistan’s economy has come under threat as the conflict in the Middle East casts adverse effects, a report by Bloomberg has said.

According to details surfaced on Friday, rising food and fuel prices are likely to push inflation higher, while the country remains reliant on external assistance.

Pakistan’s economy has shown improvement compared with the previous year. Gross domestic product growth stood at 3.9 per cent in the last quarter, against 1.73 per cent in the same period of the preceding financial year.

Despite signs of recovery, risks persist. The central bank has kept interest rates unchanged in view of inflationary pressures. Inflation rose to 7.3 per cent in March, while volatility in energy prices has added to economic uncertainty. Exports have fallen to their lowest level in eleven months, prompting the government to initiate fuel-saving measures.

The report noted that the government spent Rs139 billion over three weeks, while fuel consumption recorded a 10 per cent increase. Growth in the agriculture and industrial sectors remained slow, whereas the services sector showed improvement.