Islamabad: The global oil crisis is having a deep impact on Pakistan’s weak economy. Inflation in Pakistan may remain in double digits due to rising oil prices due to the ongoing crisis in the Middle East. This situation was highlighted in a recent report by Topline Securities. "long and changing" It has been told. According to the report, there is little hope for improvement until peace is established.
Bad effect on inflation and growth rate
It has been estimated in the report that the average inflation next year may be 9 to 10 percent. If the price of oil remains at $ 100 per barrel, then it can go above 11 percent in the last quarter of the current financial year. Every $10 increase could increase inflation by 50 basis points. If prices reach $120, inflation could reach 11 percent.
Due to this, State Bank of Pakistan may have to increase interest rates further. Rising inflation is also slowing down economic growth. Topline Securities has reduced the GDP growth forecast for FY27 to 2.5 to 3.0 percent, which was earlier 4 percent. Growth may be 3.5 to 4.0 percent in FY26, but in the industrial sector it may be limited to only 1 percent.
heavily dependent on energy imports
Pakistan meets 85 percent of its energy needs through imports. Petroleum imports may reach $15 billion in FY26. For this reason, Pakistan Stock Exchange remained among the worst performing markets in the world. The market has fallen 15 percent in the first quarter of this year.
Concern about energy security compared to India
Pakistan is now accepting its fuel weakness. India’s situation is said to be much better in terms of energy security. India has reduced its dependence on renewable energy, domestic production and diversified import sources. At the same time, Pakistan is still more dependent on imported oil and gas, due to which its economy is being affected more.
Current account deficit and pressure on rupee
According to the report, if strict action is not taken against imports, the current account deficit in FY27 could exceed $8 billion. Pressure on foreign exchange reserves will increase. Fiscal deficit could be 4.0 to 4.5 percent of GDP in FY26.
There is a possibility of a decline of 3.5 percent in remittances, especially the inflow from Gulf countries is expected to be 10 percent less. Exports may also decrease by 4 percent.
Expected domestic production
By FY27, Pakistani rupee may weaken to 298 against the dollar. Domestic exploration companies are trying to reduce LNG imports by increasing production in the future, but dependence on high interest rates, urea inflation and emergency administrative measures will remain in the near future.
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